International director David Doupe (middle) at JLL party.<@SM>The JLL party was held at the Paris hotel.<@SM>The diversity reception was held at the Mandarin Oriental.<@SM>Cushman & Wakefield's Patrick Crandall says the return of a healthy CMBS market is particularly beneficial for retail.<@SM>The Cushman & Wakefield party was held at the Four Seasons.<@SM>The Faris Lee party was held at Tryst at the Wynn hotel and brought many from the industry, including Orange County-based Tony Thompson of Thompson National Properties (not pictured).


LAS was out in full force last night to celebrate the first full day of ICSC RECon 2013. We were all over the Vegas Strip map—from the Cole Reception, Marcus & Millichap retail trends presentation at the Renaissance Hotel, Gibson Dunn‘s cocktail party at the Palms, and the ICSC RECon 2013 Diversity Reception at the Mandarin Oriental, all the way to the Cushman & Wakefield‘s party at the Four Seasons, Jones Lang LaSalle‘s cocktail reception at Paris Resort, Kennedy Wilson at the Cosmopolitan Hotel, and Faris Lee at The Wynn (to name just a few).


At the C&W reception, the firm’s Patrick Crandall, a senior managing director of the capital markets | equity, debt & structured finance group, tells that prospects for most retail projects continue to improve as the overall economy maintains its slow but steady recovery. “The capital markets are again awash in liquidity so the availability of financing for retail projects, even in secondary and tertiary markets has improved significantly,” he says. “The return of a healthy CMBS market is particularly beneficial for retail, as it is the primary source of non-recourse financing for second and third tier projects/locations.”


Also on the finance side, we chatted with RECon attendee Gary Mozer, principal and managing director at George Smith Partners, who tells us that one of the most prominent trends in today’s capital markets is a shift in lender focus from a property’s static performance to the sustainability of a property’s cash flow over time. “Lenders learned valuable lessons from the economic downturn, and are now much more concerned with the underlying characteristics of tenants themselves as opposed to simply the cash flow they produce on paper,” he says.

Previously, he adds, lenders often only looked at the quantitative basics of a project when determining whether to finance the asset. “These basics would typically include tenants’ sales figures, the anchor tenant’s credit rating, and the asset’s payment history.  Today however, lenders are much more focused on the longevity of the asset’s income stream and are delving deeper into the long-term viability of a retail property’s tenants.”


The analysis includes qualitative considerations such as examining the manner in which each tenant relates to the demographics of the surrounding market, as well as market depth for specific replacement tenants in the event of a lease termination, he explains. “Additional qualitative considerations include how retail tenants are marketing themselves in order to attract customers.” For example, he says that lenders often explore the depth of a retailer’s online presence to determine a tenant’s longevity because “today’s retailers must sustain an online presence in order to support physical locations.”


Over at the JLL reception, Craig Killman, SVP at the firm, predicts that the retail centers that offer a “human experience,” such as entertainment—movies, sports bars, high energy restaurants, progressive grocers—will do well. “Whole Foods, Trader Joes for example coupled with Lifestyle retail like Anthropology, Apple, or Lululemon, will do very well as the economy continues to improve.”

The “human experience,” Killman continues, is something that can’t be duplicated on the internet. “While e-tailing will continue to take a bite out of bricks and mortar retail sales, centers that offer a human experience will thrive in this multi-dimensional consumer market,” he says. “The internet has provided so much convenience to our everyday lives but it can’t the human need to connect and socialize and the successful centers will continue to build around this concept.”


This was also a hot topic in Paul Kurzawa‘s mind…the idea of bricks and mortar’s resilience. The COO of Caruso Affiliated recently told attendees at a RealShare L.A. event that “Retailers are adapting well. Look at catalog retailers that have shifted to brick and mortar. Athleta (gap brand). It-based concepts like Google coming out and creating these experiences and it is that work, experiences, that keeps brick and mortar alive.”

It is all about experiences for people and developers are adapting, he adds. “Retailers are not only adapting, but they are evolving… New concepts are emerging. They are re-inventing themselves to keep up with online shopping. At the end of the day, you have the ability to go to a shopping center and go to a place that enriches your life.”

JLL‘s Greg Maloney, CEO and president of JLL Retail, tells that retail activity is off to a cautious start in 2013, but moving in the right direction. “I expect real estate performance will likely not see dramatic improvements until employment growth accelerates; however, I do expect to see store openings hit a four-year high and new construction deliveries double what came online in 2012,” he says.

Another bright spot, according to Maloney, is that consumer spending is expected to increase moderately. “As residential sales of existing and new homes rise, we will likely see an increase in purchases of furniture and home goods sector, along with other non-durable goods,” he says. “Keep an eye on e-commerce as it continues to be a major influence on the industry’s success and prosperity.” is providing wall-to-wall coverage of ICSC’s RECon show in Las Vegas May 19-22. Retail Ticket will provide coverage of the event through the end of May, featuring pre-event articles, live video interviews on site and post-conference analysis. Contact Scott Thompson at about how your firm can participate.