ICSC's Michael Kercheval

GSR: Why is this convention so important to the industry?

Kercheval: It is the largest single event for our industry. Knowing that, a lot of people plan their whole business regiment around that event. To whit, they would say, "Let's just get together in Las Vegas. I know you're going to be in Las Vegas, so let's plan to get together." It kind of becomes that one time, where if you're a player in the industry, you know everybody is there during a very concentrated period of time.

It is also a highly productive and efficient deal-making environment. The numbers really range. Some of the landlords will tell you that they do or start as much as 70% of their full year's leasing during that period in Las Vegas. There are others that do less, but there are those who make that the primary leasing activity for them. All of the deals aren't signed there, but many of them are initiated.

And it is the convention for the trade association. While that kind of gets lost in the other things, it is the one time of year where the trade association can do trade association things. We can report to members, they can find out about what the association is doing, and the association can find out from members what it needs to do.

GSR: You said some companies do about 70% of their leasing at the convention and others do less. Does that usually depend on the size of the company or is there other criteria that drives that?

Kercheval: I think what happens is that we have these other regional deal making events, and there are a lot of regional-types of deals that are done at those meetings that are not done in Las Vegas. Largely that's where you're going to meet your regional retailers and regional tenants. For some of the smaller landlords, that could be a very efficient way to do their deals, if they're not looking for national or international tenants. So they'll just do it in Chicago. They'll be out in Las Vegas, but their expectations are not that they're going to find all of their tenants there.

GSR: What are some of the biggest changes attendees will notice this year at the convention?

Kercheval: I think there will be more of a business/professional-type of environment. Our theme is "Back to Business." This will involve teaching business skills, learning business tools, the actual business networking and deal making and the sessions are going to be geared toward tools and information that are of a business nature. The opening keynote speaker is Jack Welch, it's not a Hollywood entertainer or a dancer, it is the quintessential businessperson. So I think the people will get a different feel this year of a businesses function.

You'll also get a sense of more people because the numbers will be larger. I think that's another thing that people will notice, and I don't think that's a bad thing, I think that kind of crowd effect generates enthusiasm and excitement and a sense of immediacy and importance with what you're doing.

GSR: And there will also be format changes?

Kercheval: There are two important changes that seem, on the surface, rather subtle. In recent years, we have not had a real grand opening for the whole event. We've had a Monday morning opening, and not that many people were able to attend that, so we really haven't had, in recent years, an opening that begins the whole week. This year we're going to do that, and that will start at noon on Sunday. There will be a brunch for all 40,000 people, then, following that, we'll have the grand opening of the Spring Convention. That's when we'll hear from Jack Welch and Britt Hume, early Sunday afternoon. There will be a sense of that's when we'll begin, on Sunday at noon.

GSR: Why is that important?

Kercheval: We needed to have a sense of beginning and end to the convention to help people set their time. If you are going to have a kick off and set a theme of business, you need to have that at a time when people will come and can come. Sunday afternoon is a good time to do that. It will end in plenty of time for people to be at the trade show on Sunday afternoon for all of the events that happen on Sunday night. It's not going to compete or conflict with anything. You have some nice non-compete for people to go and see who's in Vegas. I felt the need for that. It just kind of happened, and I felt the need to have a real starting point.

The second change is that we will not have a Monday morning program. Instead, we're going to open the leasing mall and trade show on Monday morning, one hour earlier, so it's going to open at 8:00 a.m., and we're going to provide breakfast for everyone at the trade show. It provides some quality non-compete time.

We have also added some educational sessions on Wednesday morning. That was in direct response to a member's query. The question was, "How can ICSC provide a block of time to do some real training sessions for employees? They're so busy on Monday and Tuesday working in the leasing mall and trade show." So we're going to do that with the Wednesday workshops.

GSR: Will there be any different sessions from last year?

Kercheval: I think that we have found that people expect each of the specialty sessions, on capital markets, public-private partnerships and other topics. We're not going to drop any of those. We will continue to have some very interesting and informative keynote speakers. We'll have our third anniversary of our Hot Retailer Awards this year, on Tuesday. It's a whole new lineup of retailers that have been identified by mall marketing people as those retailers that you'd love to have in your mall because they draw crowds and they draw a buzz. That will be kept a secret until they're announced. There will also be some smaller sessions on areas of sector interest, as there have in the past.

GSR: How has the industry changed since last year's convention?

Kercheval: I think last May a lot of folks were saying, "Gee, can it get any better? We must be at the peak. I should start preparing for the downturn." It ran the gamut, and folks were very pleasantly surprised that the industry continued to do better over the 12 months for May of 2004, right on through where we are today with shopping centers, and retail in general, outperforming other sectors of the industry from a financial standpoint. We're certainly not in any sort of danger of approaching an overbuilt sense in our sector whatsoever. Around the world, we continue to be in an undersupplied environment, where demand exceeds supply. I don't know whether if 12 months ago people would believe that to be the case. Not that supply would have droned, but how could demand continue grow? Retailers continue to look for space, vacancy rates continue to decline, and rents continue to rise across the sector. Are we at the peak today? I think that a lot of people are going to be saying, "No, we're not at the peak." Largely that has to do with the capital markets continuing to look for good retail property types. There's maybe not the same rapid rate of increases, but there still is a lot of upside in our industry. There's no indication that when it slows it's going to crash, there may be a plateau. But even that plateau is some time out in the future.

GSR: ICSC membership and attendance keep increasing every year. Why is this happening?

Kercheval: When you look at what's happening in the membership, there are a lot more shopping center owners that are joining ICSC, and I think a lot of them are new to the shopping center owner field. There are a lot of people who are building one open-air center, and they have joined ICSC because it's very expensive and because they know from other people that it is the best way to get information and learn about the industry. We are very willing to share our successes, as well as where we've made mistakes. And we're seeing growth in our industry, and it's reflected in growth in our membership, from sectors outside of the mainstream of our industry, cities, counties and public planning officials who are joining ICSC for the education programs, networking, and in many cases, cities are joining ICSC for deal making. Maybe they just need to get a grocery store in their rural Nebraska community. And where can they go to find someone who will build the store, tenant the store and finance the store and find out about how this whole industry works other than through ICSC? We're seeing a rapid growth in membership from that side of the industry, the public sector. Now we're seeing more partnerships. And then there are developers joining because now they can meet the planning official in their town and discuss their plans in a non-confrontational environment, in Las Vegas, rather than in front of a bunch of townspeople who all have strong opinions.

GSR: Why the convention always held in Las Vegas every year and not any other cities? Would you think about moving it?

Kercheval: Our convention in terms of square feet occupied is the 13th largest convention and trade show in the United States. That belies the economic significance of the meeting in Las Vegas. The city reports that our show is the No. 1 show in terms of food and beverage expenditure of any convention in Las Vegas. We're probably in the top five in shows in Las Vegas. Even though we're not the largest in terms of square feet or attendance, nevertheless we spend more on food and beverage. The significance of our meeting is not lost on the city, and they're a very good and welcoming host. And the facilities in Las Vegas work for us.

There are not a lot of cities in the United States that could host a meeting of our size and at the same time be as centrally located with the airlift and the diversity of hotels. Being in Las Vegas works for us and probably works better for us today than anyone envisioned 10 years ago. The city has really come of age as well. If we came in from another planet and said, "Where do we want to hold this meeting, we'd probably go to Las Vegas." And our members seem to like it. It's real easy. They all know where they're going to stay, and they can tell people where they're going to meet on the Strip. They know the restaurants, they know the drill, so a lot of the anxiety of having to learn a new city is gone. I think there are other cities that are fabulous and could host the convention, like Chicago or Orlando, but I have to say, if it's not broken, moving it to another city makes it less productive.