The Mood at ICSC: Cautious Optimism or Wishful Thinking?

“We just don’t know what’s going to happen.”

We heard that so many times at ICSC 2022 in New York City this week, we almost checked our badge to see if it was the official slogan of the retail mega-event, which drew an estimated 10,000 of CRE’s best and brightest to NYC’s Javits Center.

If you wanted a certain answer to where the rubber will meet the road in the next 6-12 months in a time of great uncertainty, the best place to hang out was the Mavis Discount Tire booth, where you could take a deep breath next to the racks of steel-belted radials and be certain that you were ready to roll for at least another 60,000 miles.

(We could have extended our roadmap to 80,000 miles, but Michelin apparently isn’t ready to resume international business travel.)

We were about to offer Mavis a sale-leaseback deal on four of our tires (they’d buy them in an all-cash transaction with a 2% cap rate and give us a five-year lease on four of their new all-weather wheels—and they won’t have to assume the debt on our Michelins), but we needed to find some aspirin to treat a sudden case of whiplash.

Our neck started bothering us when we asked attendees to tell us what will become of the retailers in central business districts that are surrounded by vacant office buildings. One CEO waved his smartphone at us and said: “Look at this!”

Apparently, NYC Mayor Eric Adams was in the midst of unveiling plans to rezone large chunks of the Big Apple as part of an effort to build 500K new homes over the next 10 years, which sounds a lot better than telling the NYPD to round up all the loitering buildings and order them to get moving.

Then the guy waving the phone said: “We really don’t know what’s going to happen to CBDs.”

We asked the experts who were predicting a mild recession with modest unemployment, consumer spending still on steroids and everyone crowding into bars and restaurants because they’re fed up with the disruption to their lives to explain this to the ghost of Paul Volcker, who has been keeping Jerome Powell up at night telling him that you can’t cure inflation without a serious dose of job losses.

“Powell will lob a 50 bps softball at us and burb and this will all be over!” one CRE exec declared, but then a brokerage chief in a booth 180 degrees to the East side of Javits told us “there will be pain, but it will take 12 to 18 months to know how painful it will be.”

A guy checking the tread on a Mavis tire looked up and said: “We really don’t know what’s going to happen to inflation, interest rates and employment.”

When we started asking people when all the capital sitting on the sidelines would flood back into CRE markets, they started diagramming the double-reverse play known as the “flea-flicker” that a quarterback for the NY Giants used to run, but our neck was too sore at that point to see how it turned out.

Full disclosure: as this is being written, the government is preparing to unveil the latest CPI. It will either meander in the low 7% range or plunge to 5.6%–if it’s the latter, we can all hope that projections of gloom and doom will be replaced by a happier outlook for a new and improved economic cycle next year.

We’d give you our bold prediction, but we’re waiting for the aspirin to kick in as we digest the six-ounce, $40 steak we just ate. All we can tell you about the CPI at this point is that we really don’t know what number it will land on.