EXPERT Q&A: Conventional Wisdom
Jun 1, 2006 12:00 PM, By Robert K. Futterman
Retail Traffic: What was your overall impression of the Spring Convention?
Attendance was high. The participants have changed a bit over the years. It used to be tenants, landlords and brokers. Now you've got bankers and lawyers coming en masse and some of them throw the great parties… Real estate has become accessible to so many people. And retail seems to be a sexy part of business, attracting a lot of people.
RT: Were there any major surprises?
There was a lot of buzz about Federated Department Stores giving back space, and people are interested in what will happen with Lord & Taylor. They are on the edge of their seats… I also think that lifestyle centers are really starting to come full circle and come into their own, which is nice. You're starting to see some of these centers mature. It feels like we went through five or six years in the planning process, but now those properties are open and posting healthy sales volume.
RT: How was the show for you and your business?
The most explosive growth vehicle for us has been our Retail Property Advisor division. We're doing projects in Bloomfield Hills, Mich., Naples, Fla., Hollywood and Highland in Los Angeles, Steelworks in Pittsburgh and Town Square in Las Vegas. It is ground-up advisory work for lifestyle or urban entertainment for developers and it's been a growth vehicle for us… Our tenant representation business is also doing fine.
RT: What are the biggest stories coming out of the convention?
Pre-ICSC you saw a couple of cool announcements like J. Crew's new concept and you've got Urban Outfitters' Free People in high demand. Tiffany and Limited Too have new concepts as well. A lot of tenants are gearing towards the younger, urban markets. Either these kids are running around with their parents' credit cards or this stuff is just really affordable. Companies like Forever 21 and H&M started that trend. And now a lot of tenants want to get a crack at that customer. It makes shopping fun because you can do it every week and not wear the same thing.
RT: It seemed that mixed-use again was a major buzzword at the convention with tons of projects billed that way. Are we really going to see all these projects come to fruition? Is this the direction in which the industry is evolving?
The Time Warner Center in New York to me is mixed-use with retail, hotel, condos and office. When you look at other cities like downtown Los Angeles, when you look at Miami, I think in major urban areas mixed-use development makes sense. There is an economy of scale in putting multiple uses on one site… On a smaller scale, hotels and retail tied in together are more and more popular… Residential is always a great complement and if there is a market for office space and hotels, you'll see those additions to centers to make mixed-use projects.
RT: Where does industry sit today?
Cap rates are still very, very low for investors that want to buy retail real estate investment properties. There are no signs of slowing on that end. The retail business and regional mall in general seem to be doing ok. Even if department stores give back space to regional mall developers, owners are getting very creative in finding uses in restaurants or lifestyle centers… I didn't hear any doom or gloom, even in urban areas.
Robert K. Futterman is founder and CEO of Robert K. Futterman & Associates, LLC, a retail leasing, investment sales, and consulting and advisory services firm.
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