With mall traffic down, retailers cutting back and construction costs rising, U.S. developers are under increasing pressure.
That reality hit home last week during the RECon convention in Las Vegas organized by the International Council of Shopping Centers. Although busy, the event was not as robust as in recent years, executives said.
However, they sought to present a positive front by unveiling plans for new projects and beefing up existing facilities with an eye for the long term and hopes that by early 2009, if not sooner, the economy could start to bounce back.
Many described the mood going forward as somewhat optimistic and said retailers were targeting 2010 to resume more aggressive expansions after staying conservative through 2009.
"It actually seems to be better than one has anticipated," John Bucksbaum, chief executive officer of General Growth Properties Inc., said in describing the business climate at RECon. "Business is maybe not as bad as the press generally makes it to be. But no one is doing cartwheels or handstands."
David Solomon, president and ceo of NAI Global's ReStore division, suggested more tough times ahead.
"Nobody is doing really well, though the high end is more insulated than any other area," he said. "It's the broad middle that's really sucking wind, and there will likely be more shakeout before things improve."
Anthony Buono, CB Richard Ellis' executive managing director for retail services, said, "The good news about the market is that it's a lot more measured now and not so much froth. It's an opportunity. If you are an equity investor this is a terrific time."
Aside from the economy's impact on development and leasing, the major themes to emerge at RECon were continuing global growth, sustainability and strengthening mixed-use centers with better tenants.
Developers cited CostCo, Wal-Mart and Target as highly desirable tenants in a down economy, largely because of their pricing and their grocery offerings, which have fared well. Westfield Group, for example, will house Target as well as Neiman Marcus as anchors this year in its Topanga center near Los Angeles' San Fernando Valley.
Some shopping center operators said they were exploring Leadership in Energy and Environmental Design, or LEED, certification for projects in development to achieve long-term cost savings and attract an eco-minded consumers.
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