Net Lease Insider asked Patrick Nutt to contribute his analysisof the 2010 ICSC convention.

It is as follows:

In the weeks and months leading up to this years ICSC convention inLas Vegas, everyone I spoke with had uncertainty about the overallturnout and value in attending the conference this year. Well, as Isit in my office fresh off a 72 hour session of networking, dealmaking, and walking (lots and lots of walking), I can emphaticallysay that once again it was a great event and well worth attending.While we can all work effectively through the use of emails andphone calls, the opportunity to sit down face to face with clientsand discuss existing business and future plans is always time wellspent. I am still revisiting all the conversations I had andobservations I made, but here’s a glimpse of what I took away fromthe show.

Attendance:

I heard various numbers mentioned from a variety of sources, but Iwould say that attendance was about even with last year, howeveractivity was up. It seemed as though most attendees this year hadpretty busy schedules and were discussing real activity that willoccur over the next 12 months, rather than casually discussinghopes and plans like the 2009 version of RECon.

Prettiest girl at prom award goesto: Dollar General.

All aspects of the net lease world were feverishly talking aboutDollar General and their aggressive expansion to include 600 newstores a year. We’ve seen merchant developers that formerly focusedon power center and grocery anchored locations now shifting theirresources toward building 20-60 new dollar general stores in thecoming months. REITs and private funds alike are looking to thisretailer to fill their need to place capital. This is purely anumbers game for all parties, as Dollar General needs to open thesestores to keep Wall Street happy, merchant developers need volumeto create efficiencies to make this a profitable program, and theinstitutions need this same volume and a pretty yield to make senseof acquiring assets generally priced in the $850k to $1.5M range.This could be a winning combination for all, but we’ll be keeping awatchful eye on this program to see if everyone can execute onthese plans.

Biggest Question: What do I do withall this money?

That was basically the continuing theme from the institutionalgroups. With the rebound in the REIT sector, they are all flushwith capital and need to put that money to work. They are payingtheir investors a return from the day they receive it, so money notspent is worse than accepting a slightly lower cap rate. With thelack of product on the market, acquisitions are in short supply andhas everyone searching for quality assets. With the dead pipelinefrom the past few years, very little new development is coming outof the ground, forcing buyers to chase existing properties, butowners are repeating the same question…..if I sell today, what do Ithen do with the money??

Retailer Activity:

If you are a net lease player, the next 12-24 months should beexciting as the typical single tenant retailers were discussing newstores, relocating old locations, reasonable growth in strongmarkets, etc. For those in the shopping center, power center, orregional mall world, recovery is still a long ways off. The big boxtenants are still waiting patiently for more signs of recovery inthe global economy before moving forward with new locations. 2010and 2011 will see the smaller retailers continue their slow growthplans, while big boxes will begin to move forward in2012-2013…..that is if the economy and job markets continue tostabilize and improve.

Phrase least heard: “DistressedProperties”

What seemed like the mantra of the 2009 RECon was almost neverbrought up this year. Much of the capital raised over the past twoyears has yet to be deployed, and would-be vultures have acceptedthe reality that lenders and servicers simply don’t have the needor ability to flood the market with distressed assets. They haveproven that they would prefer to work with existing borrowers andrenegotiate the debt terms or extend maturities rather than take agreater loss by selling into a market filled with bottomfeeders.

Overall, it was a good show with great activity from allparticipants. While we are still a long way from being out of thecommercial real estate mess of the past several years, people inevery aspect of the industry have learned a new reality for dealflow and real estate fundamentals. The industry is very differenttoday than in previous years, the reckless have wrecked themselves,while the experienced and diligent have found a way to stay aliveand do another deal.