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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

22nd Annual Connecticut Commercial Real Estate Conference

Brad M. Hutensky

ICSC Chairman

May 9, 2013


Retail real estate overview
Retail Real Estate Overview

  • The International Context

  • Internet’s Impacton Bricks & Mortar

  • The Opportunities in US/CT Retail



Have seen growth first hand
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 space under construction
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






Brad m hutensky icsc chairman may 9 2013

Every market is different

  • Customers Wants & Needs

  • Government’s laws

  • Industry Norms


Brad m hutensky icsc chairman may 9 2013

World Speaks Language of Retail

1) Product

2) Price

3) Convenience

4) Service

5) Experience



Will e commerce make bricks mortar retail irrelevant

Will E-Commerce make Bricks &Mortar Retail Irrelevant?


Brad m hutensky icsc chairman may 9 2013

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


Brad m hutensky icsc chairman may 9 2013

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



But here s the truth

BUT HERE’S THE TRUTH


Retailers still expanding
Retailers Still Expanding

Source: RBC Capital Markets


Where we buy depends on what we are buying
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
Need for Human Contact

Trip to the Mall


Need for human contact1
Need for Human Contact

Trip to the Theater


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

Source: The Top 500 List


Conclusion
Conclusion

  • Customer is changing

  • Successful retailers are changing too

  • Internet is driving efficiencies in pricing, inventory and customization


U s r etail r eal e state m arkets
U.S. Retail Real Estate Markets


U s retail real estate market in brief
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 about u s retail r e markets
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
Where are the opportunities?

  • Redevelopment (aging stock; best locations)

  • Urban/Mixed Use

  • Serve the new population growth



Age of u s shopping centers
Age of U.S. Shopping Centers

More than 15 years old

~80%


E commerce c reates opportunity
e-Commerce Creates Opportunity

As store sizes become smaller…

  • Re-tenanting upside

  • More locations per market

  • More new development


Brad m hutensky icsc chairman may 9 2013

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.



Us total population
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 connecticut follows us trends
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



Brad m hutensky icsc chairman may 9 2013

Total ICSC Membership 59,000+

Canada6%

Other5%

Europe7%

U.S.81%


Brad m hutensky icsc chairman may 9 2013

ICSC World Wide

  • In 2012: 350 meetings; 100K+ attendees

  • RECon Las Vegas, USA 32K registrants

  • $57MM annual budget


Brad m hutensky icsc chairman may 9 2013

ICSC Goal: Members’ Success

Networking: a business of relationships

Education: Learn from the experienced

Research: All the information you need


Brad m hutensky icsc chairman may 9 2013

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