LAS VEGAS — As large parcels of land suitable for new malls become scarce, and as retail continues to be tumultuous with vacancies rising at a higher rate than leases get signed, the nation’s shopping center industry grapples with how and where to grow.

The angst was evident at the International Council of Shopping Centers spring convention here May 18-21, where a total of 30,848 mall developers, retailers, brokers, public officials and financing executives weighed their next moves, as they do each year at the huge annual event. Blighted downtown communities, the overstored suburbs, overseas opportunities, lifestyle centers and other emerging formats, were all debated.

According to the ICSC, there are 45,721 shopping centers in the U.S., and they’re still the dominant format for retailers, accounting for $1.2 trillion in sales in 2002, up 4.2 percent from 2001. Nonenclosed centers comprise some 95 percent of all malls in the U.S., according to the ICSC.

“Retailing is tough, but it is not that bad when you compare it to other sectors,” observed Tony Deering, chairman of The Rouse Co. “Retailing is hanging in.”

While heartened by low interest rates and a consumer who still spends, Deering cautioned, “We must be very careful not to get in trouble. Interest rates are so low people think they can do things that later on, in retrospect, were too adventuresome.”

At the convention, “There are a lot of projects looking for tenants as opposed to tenants looking for projects,” said Jeffrey Paisner, executive managing director at The Lansco Corp. “Tenants are being more aggressively pursued.”

Alan Smith, executive vice president of Konover & Associates, said the problem could be fixed by simply reading the telephone book and considering hospitals, clinics, churches and daycare centers as tenant options. New and smaller store prototypes being tested by Old Navy, Dillard’s, Robinsons-May, Macy’s West and Sears are other options, he said.

Anticipating how a retail space could be divided, even if a retailer’s departure is five years away, should be done as soon as possible. “Don’t wait,” cautioned Stephen Hopkins, president of Hopkins Real Estate Group.“It’s never if a retailer vacates, it’s when,” added Michael E. McCarty, president of Simon Property Group.

The hastening of “lifestyle centers,” defined as a 300,000 to 400,000 square foot collection of upscale specialty stores with dining and entertainment features, is another problem hitting the industry. The issue surprised many, considering that at last year’s convention, lifestyle centers were touted as a hot segment. But this year, some at the convention contended that developers lack sufficient research on demand before entering a market.

“Anything where there is not a restraint on expansion generally gets overbuilt in the real estate industry,” said Deering. “You can pretty much secure a 30-to-40 acre parcel of land and call it a lifestyle center. As long as capital is plentiful, facilities get built regardless of underlying market support. It’s turning out to be a more difficult business than people perceived it to be originally.”

Keith Eyrich, president of The Irvine Co., said some lifestyle centers are considering integrating discount stores into the format alongside high-end specialty stores, though one of his own properties, The Irvine Spectrum in Irvine, Calif., is not included in that kind of plan. “My sense is that it is all part of the process to try to get a finger on the pulse of the customer,” he said. “That’s what this business is all about — getting the right retail in the right environment at the right time.”

Several politicians at the trade show suggested public and private partnerships are a growing opportunity for mall developers. “Clearly this is a big story,” noted Brad Hutensky, president of The Hutensky Group real estate firm. “The ICSC convention used to attract [just] leasing agents. Now you see more public officials. They realize what an important addition to economic redevelopment retail can be.”

Some 41 cities were represented in the municipality section of ICSC’s leasing mall, up from 23 cities last year. They came to create projects that would revive tax bases, provide jobs and help blighted areas.

“They’re one of the fastest growing sectors of our membership base,” noted ICSC spokeswoman Patrice Duker. “I think what it really proves is that both the private and public folks have different issues, but they both want to take on downtown redevelopment.”Indeed, 35 mayors assembled in a seminar promised less red tape in the bureaucratic permitting process and more public money for the development of inner city retailing.

“If a mayor wants to get it done, it gets done,” vowed James Garner, mayor of Hempstead, N.Y., pledging to break down political barriers and sweeten the pot with a 50 percent tax abatement on new developments.

Inner cities represent enormous buying power, according to Mayor Harvey Johnson Jr., of Jackson, Miss. “We’re concerned that those residences will go outside the city to shop,” he said.

Mayor Rita L. Mullins, of Palatine, Ill., exclaimed, “Give me retail or give my city the budget death knell.”

Meanwhile, developers and retailers sat a little straighter in their chairs upon hearing the U.S. Hispanic population has soared to over 33.5 million people in the last 10 years and represent some $580 billion in retail sales, according to data from University of Georgia’s Selig Center for Economic Development. The Latino market is expected to increase by over 60 percent in the next five years.

“That really gives you an idea about the potential of this audience represents to shopping center developers and retailers,” noted James King, a real estate strategy manager for J.C. Penney Co. Inc.

Selig Center’s numbers indicate more than half of all Latinos live in Texas and California, and five states account for 75 percent of this population — Texas, California, Florida, Illinois and New York. Seven states have tripled their Hispanic population in the last 10 years — Nevada, Alabama, Arkansas, North Carolina, South Carolina, Tennessee and Georgia. “There’s movement beyond the traditional immigrant gateway markets,” noted King. “And that has implications down the line for retailers and shopping centers alike.”

According to research culled by Penney’s, Hispanic women spend more on clothes than any other ethnicity. And the Plano, Tex.-based retailer, with 1,049 stores, has been actively catering to this group with Spanish advertising, Hispanic model searches and clothing earmarked to their tastes. “We’re trying to get customers for life,” noted Christie Byrd Smith, a Penney’s spokeswoman, said during a session.Esperanza Carrion, marketing director at Goya foods, suggested linking with this customer by emphasizing family matters, the immigrant experience, communicating in Spanish, particularly through Spanish media, food, music and sports, community support, and identifying the brand as “caring.”

By the year, 2050, between 80 and 90 percent of Hispanics will have been born in the U.S. and will relate as much, or more, to the American culture as to their Latino roots.

“My own family is Cuban, but I have more in common with a Mexican living in East L.A. than with my relatives in Cuba,” said Betty Cortina, editorial director of New York-based Latina Magazine.

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