Top Takeaways: ICSC@WESTERN

Retail dealmakers and industry experts came together this week at the ICSC@WESTERN conference in Palm Springs, California. Slatt Capital team members were among the attendees digesting insights from dozens of insightful panels spread across the 3-day event. The following is a selection of our key takeaways from the event.

• While attendance was down slightly from previous years, the general consensus was that the core group of brokers, developers, tenants, lenders and service providers that attended found it very valuable.
• Retail remains a very desirable asset class from institutions and individual investors alike. The struggles of aging malls and e-commerce and the storms of the pandemic are in the rear-view mirror as retail has emerged as a survivor asset class.
• Several local and national legislative issues threatening the retail sector, including increases in minimum wages for retails, additional environmental regulations at the property level as well as throughout the retail logistics sector, and underwriting for “political risk” of all types are affecting some markets more than others.
• There is some early but shared concern over property expenses such as real estate taxes and insurance and the ability for some tenants to continue to weather increased costs. Some early distress in reimbursements and CAM charges can be seen along the margins.
• Institutional interest in retail is expanding into smaller properties, such as portfolios of single-tenant assets and individual unanchored strip retail investments nationwide.
• Tenants are unafraid to experiment with new concepts and abandon old business models in the face of new data or consumer trends. Adaptability is enabling survivorship and thriving, while those who are slower to adapt are materially behind and more vulnerable to headwinds.
• Lending for the sector is plentiful, and terms are improving. Several investors commented on receiving interest rate spreads that rival the bottom of the market in 2021 and any further downward movement to US Treasuries should spur additional investor interest at lower coupon rates.
• The retail movers and shakers are a largely aging population but there is more confidence that the younger folks that are ready to step in are sophisticated and any generational transition should be successful.

Cody Charfauros
Principal | Managing Director
D: 858.257.2110
codyc@slatt.com