Brad m hutensky icsc chairman may 9 2013
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22 nd Annual Connecticut Commercial Real Estate Conference. Brad M. Hutensky ICSC Chairman May 9, 2013. Retail Real Estate Overview. T he International Context Internet’s Impact on Bricks & Mortar The Opportunities in US/CT Retail. Why Is Retail Exploding Globally?.

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Brad M. Hutensky ICSC Chairman May 9, 2013

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22nd Annual Connecticut Commercial Real Estate Conference

Brad M. Hutensky

ICSC Chairman

May 9, 2013


Retail Real Estate Overview

  • The International Context

  • Internet’s Impacton Bricks & Mortar

  • The Opportunities in US/CT Retail


Why Is Retail Exploding Globally?


Have Seen Growth First Hand

  • In Brazil: 44 Malls in next 24 months

  • In Middle East: Malls being built EVERYWHERE!

  • In China: 24.5 Million Sq. Ft. in Tianjin


Shopping Center SpaceUnder Construction

24.5 mm sf

  • Tianjin, China

  • Shenyang, China

  • Chengdu, China

  • Abu Dhabi, UAE

  • Wuhan, China

  • Hanoi, Vietnam

  • Beijing, China

  • Shanghai China

  • Kuala Lumpur, Malaysia

    10-14 Xi’an, Shenzhen, Chongqing, Nanjing, Guangzhou China

Source: CBRE


Retailer: The Growing Middle Class


Year-Over-Year Retail Sales

Source: ICSC


GLA Per Capita

24

.76


Mall Development 2007-2012


Every market is different

  • Customers Wants & Needs

  • Government’s laws

  • Industry Norms


World Speaks Language of Retail

1) Product

2) Price

3) Convenience

4) Service

5) Experience


The Threat of E-Commerce


Will E-Commerce make Bricks &Mortar Retail Irrelevant?


Retail is dead, long live retail

Brick-and-mortar stores serve customers who end up buying online

The internet has made shops obsolete in some towns


The Internet’s Growing Share of Retail Sales

5.2%

1.6 %

Source: U.S. Census


Showrooming: visit the store, study the product, shop online for the lowest price


Retailer Bankruptcies & Store Closures


BUT HERE’S THE TRUTH


Retailers Still Expanding

Source: RBC Capital Markets


Where We Buy Depends on What We are Buying

Buy on the Internet

Buy at Stores

Men’s suit, hair cuts, home furnishings, groceries, apparel, pharmaceuticals

  • books, music, shoes computer software, video games


Need for Human Contact

Trip to the Mall


Need for Human Contact

Trip to the Theater


Advantages of the Store

  • Immediate gratification

  • Cash purchasers

  • Exchange/return

  • Omni Channel


Retailers with Major B&M Presence Are 12 of the Top 20 Highest Online Sellers

Source: The Top 500 List


Conclusion

  • Customer is changing

  • Successful retailers are changing too

  • Internet is driving efficiencies in pricing, inventory and customization


U.S. Retail Real Estate Markets


U.S. Retail Real Estate Market in Brief

  • 113,355 Shopping Centers = 7.5Billion sq ft of GLA in 2013

  • Creates 18 Million Jobs

  • Modest sales increases

  • Minimal New Development

  • Only 1 Mall opens in 2012

  • About 46 new open air centers open YTD


Three Observations AboutU.S. Retail R.E. Markets

  • We don’t need more supply, mostly

  • Bifurcation of Capital

    • “A” Properties get lots of attention

    • Non-stabilized, smaller market, lesser tenants get little attention

  • Lender Balance Sheets are swollen


Where are the opportunities?

  • Redevelopment (aging stock; best locations)

  • Urban/Mixed Use

  • Serve the new population growth


Repositioning Opportunities


Age of U.S. Shopping Centers

More than 15 years old

~80%


e-Commerce Creates Opportunity

As store sizes become smaller…

  • Re-tenanting upside

  • More locations per market

  • More new development


Why Governments Embrace Retail Real Estate

  • $1 million in sales at a

    • brick-and-mortar store

    • creates nearly 4 jobs.

  • Catalyst for other uses (residential & office)

  • Retail attracts visitors and related businesses and generates tax revenue.


Opportunity from Population Growth


US Total Population

Redevelopment (aging stock; best locations)

2010-2050

Growth

1970-2010

Growth

~440 million people

~309 million people

~203 million people


Retail In ConnecticutFollows US Trends

  • Older stock: Lots of opportunity for redevelopment

  • Population: we will get less than our share

  • Urban/Mixed Use:

    • Blue Back Square: West Hartford, CT

    • Storrs Center: Mansfield, CT

    • Front Street: Hartford, CT


International Council of Shopping Centers in Brief


Total ICSC Membership 59,000+

Canada6%

Other5%

Europe7%

U.S.81%


ICSC World Wide

  • In 2012: 350 meetings; 100K+ attendees

  • RECon Las Vegas, USA 32K registrants

  • $57MM annual budget


ICSC Goal: Members’ Success

Networking: a business of relationships

Education: Learn from the experienced

Research: All the information you need


Some Final Thoughts

  • Retail Real Estate Truly Global: In Different Stages of Maturity (US most mature)

  • Massive Change =Massive Opportunity

  • ICSC: Goal to help US & Growing International Members Prosper at Whatever Stage


THANK YOU!


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