Wednesday, March 2, 2011

ICSC Observations

Andrew Fallon, Calkain Companies Associate, provides his obervations on the 2011 Mid-Atlantic ICSC.

What differences did you see between this and last year’s conference?

This year’s ICSC Mid-Atlantic Conference had a very positive vibe. Attendance was up and there was a general buzz that was not there in 2010. I think that in February 2010, there was still a lot of uncertainly and concern about the economy and how the market would recover from the depressed conditions. In place of that uncertainty and concern was anticipation and optimism.

While there is always deal making at an ICSC conference, this year’s show seemed to have more velocity and urgency. There was a strong developer and third party presence, indicating that once stalled projects are back online and moving forward. Retailers and tenant reps were actively seeking new opportunities for expansion. On the heels of 2010, brokers, developers, lenders, and retailers are excited about continued growth and recovery in 2011.

What was the outlook at this year’s conference?

The consensus is that the commercial real estate market bottomed out in 2008/2009 and significantly recovered in 2010. We are now accelerating from recovery to expansion. The capital markets discussion revealed not only that many lenders are active again, but also that they are willing to be flexible on terms. Of course, the flexibility is on core, class A assets, which are trading at pre-crash values -- meaning sub 7% and in some cases sub 6% cap rates. The obvious concern is when and how quickly interest rates will rise.

The bottom line: consumers are spending again, leasing activity is up, rental rates are increasing, and investment sales volume should exceed 2010. The outlook is positive, and next year, we might be discussing the successes of those who capitalized on spec development opportunities.

Andrew M. Fallon | Associate

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