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LAS VEGAS-Against a backdrop of record-setting attendance at the annual convention of the International Council of Shopping Centers–36,000 and still counting through the third day of the four-day meeting–most remain bullish about the retail sector’s performance in the year ahead. Panelists at a retail trends event staged by Marcus & Millichap last night echoed the general feeling.From an investment standpoint, “this is a great time to sell retail–and a great time to buy retail,” M&M managing director of research services, Hessam Nadji, told attendees at the Las Vegas Hilton. He explained the conflicting stances by noting that, “for buyers, the right property at the right interest rate” makes sense in terms of positioning oneself in the market. And for sellers, “it’s a great time to upgrade a portfolio for the next up-cycle.”Nadji provided some economic background to the current market, noting that the recession was mild, that consumers continued to spend throughout the downturn, and that the country kept building homes at a record pace. “Refinancing kept things going, especially retail sales,” he explained, noting the tie-in to home improvement and housing-related activities.For the near future, Nadji predicted that the retail investment sector won’t be seeing any major pricing correction from its current high levels because “there is no credit crunch and no overbuilding.” He also predicted 5% to 5.5% annual retail sales growth this year, a decline in retail vacancies nationally of a half basis point in each of the next two years, and some tightening of the gap between cap rates and security.There are some risks, he cautioned. For one, “consumers are exhausted, and there is uncertainty regarding inflation.” And there are some issues specific to retail, including what he terms “the Wal-Mart factor,” specifically “the grocery wars.” Other issues include store closures and the credit quality of some retailers, as well as demographic shifts and the impact of e-commerce.Leading off a panel chaired by Bernard Haddigan, who heads M&M’s retail group, Stuart Tanz, president/CEO of Pan Pacific Retail Properties, told attendees that buyer demand for such properties “remains strong on the West Coast. We see demand continuing strong for the next 12 months, and supply continues to be constrained.”And in general, “there is good demand across the country,” according to Glenn Rufrano, CEO of the New York-based New Plan Excel Realty Trust. “There is plenty of capital, but the key is the dearth of product,” he added, although suggesting that there could be “more supply over the next six months.”Mark Finerman, managing director of the Connecticut-based RBS Greenwich Capital, an arm of the Royal Bank of Scotland, concurred that there is plenty of capital “on the sideline that, over the next six to 12 months will be looking for a home. Retail has performed well, and is in demand.” As far as interest rates, it’s 50-50 that rates will go up or down, “because they are where they are,” Finerman said. “There are a lot of issues, and we will see rates kind of ‘hang in there’.”Tanz noted that there is still some volatility in the capital markets, and it will stay that way for the next 12 to 18 months. “That will have an impact in terms of pricing.”And in general, “retail offers the best characteristics and the strongest fundamentals,” according to Tanz. He said that the sector is dominated by “strong tenants with long leases, especially anchor tenants” who tend to “stay a long time” in their locations, once they’ve established consumer loyalty.”Retail is the only sector that didn’t show negative numbers in the recession,” Rufrano said. “Look at the numbers–they speak for themselves.” And unlike other real estate sectors, “we know how to fill space,” he concluded.

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