Tom McGee, CSC chairman and ceo

Shoppers, an already fickle bunch, are becoming harder to predict. And who can blame them, what with the economy’s mixed signals, din of promotional activity and exponentially increasing retail options.

Naveen Jaggi, president of retail brokerage Americas at JLL, believes the economic recovery has been somewhat overstated. “In the U.S., it’s been a financial, markets-driven recovery, not a wages recovery. As a result, consumers still are not of the mind-set to spend aggressively,” Jaggi said. “Consumers are in a neutral place, not a place where they’re eager to spend money.”

Lower gas prices can be misleading. “Gas is still a consumer good. It’s a myth that we’re gaining dollars from lower prices at the pump.”

Investing in new shopping centers is a bit of a chicken-and-egg question, Jaggi said, adding, “Do you build new shopping centers to encourage consumers to buy more or do we work on improving the job environment?”

Incoming International Council of Shopping Centers chairman and chief executive officer Tom McGee has a more bullish take on the matter. The ICSC is predicting sales will rise 3.3 percent over last year’s Christmas holiday period, and sees consumers spending slightly more than $700, versus $677 in the same period last year.

“A lot of folks talked about the warm weather, but the broader trend is that the holiday has lengthened,” McGee said. “The importance of Black Friday isn’t the same as it was, but sales are taking place over a longer period of time.”

While few would disagree that Black Friday has declined in importance, it remains to be seen whether retailers erode their profit margins by ratcheting up deals and promotions before, during and after Thanksgiving and Black Friday.

“There isn’t a great gathering of clouds of despair,” said Webber Hudson, executive vice president of Related Urban, while acknowledging that “there are a lot of independent issues, including currency and tourism.”

“Interest in coming to the U.S. on the part of European retailers is still very high,” said Jaggi. “Our top gateway cities are doing well. At some point, the line splits from those markets to the next level of markets where we’ll likely start to see drags.”

A study by Bain & Co. found that the dollar is too expensive for many global tourists. Although local consumption in the U.S. is growing, it’s barely been sufficient to offset the lost tourism revenue. Still, Bain noted America’s reigning status as the world’s largest luxury market.

Elsewhere around the world, luxury markets have suffered, such as Hong Kong and Macau, where government measures aimed at regulating the gray market in China put a crimp on spending. Russians cut their spend in Europe by 37 percent in 2015 and consumption by the Japanese in Europe fell 16 percent, according to Bain.

Robin Abrams, executive vice president of Lansco Corp., said international retailers are looking for partners to assist them in breaking into U.S. markets. “It’s challenging because the franchise/license model for the most part is not prevalent in this country,” she said. “There’s also a debate about foreign tenants entering and/ or expanding in the U.S., and whether an urban street-front strategy or a mall strategy, or both is best. And there’s the question of whether a brand needs a Manhattan flagship for brand exposure.”

U.S. markets generating momentum include the Houston and Dallas areas. Simon Property Group is giving a $250 million makeover to the Houston Galleria, which will include new dining options and 25 to 35 new specialty stores.

Two mixed-use projects are on the books in Dallas. Legacy West, opening in 2017 in the North Dallas suburb of Plano, is a ground-up development that targets the 265,597 residents living within 5 miles, including 66,147 with annual in- comes of $100,000 or more. The long-delayed Water Street retail and residential complex is back on track after being stalled during the recession and missing a groundbreaking date in 2013.

New development in Miami includes Brickell City Centre, a $1.05 billion mixed-use project planned for downtown. While tourism from Russia and Brazil has slowed, Brickell is nonetheless targeting an international clientele with retailers such as Valentino, Chopard, Acqua di Parma, Santa Maria Novella and Diptyque.

While gateway cities are healthy, Jaggi questioned whether the economic recovery will extend to secondary and tertiary markets where shopping centers have higher vacancy rates than the 2 percent of centers in top markets.

“There’s a diversity of [shopping centers] that are doing exceptionally well,” ICSC’s McGee said. “Some properties are more challenged. The realities around the success of a property have more to do with the underlying success of the local economy and the community. [Overall,] rents are up. About 93 percent of sales are done in brick-and-mortar. New centers are being built, but more capital is being invested in the redevelopment or reconfiguring of existing facilities”

Related’s progress in leasing New York’s Hudson Yards points to the strength of physical retail, Hudson said. The mixed-use project on Manhattan’s far west side, is 50 percent leased.

Related’s Shops at Columbus Circle is holding its own, Hudson added, “with a food and beverage strategy and Jazz at Lincoln Center.”

“When we compare ourselves to what’s happening on Madison Avenue and Fifth Avenue, we’re in a good place,” Hudson said.

Madison Avenue has vacancy signs on every block as landlords who acquired property at peak prices try to recoup their costs.

“There was a time when people were buying up real estate and trying to do deals at a 4 percent or 5 percent cap rate,” said Jeffrey C. Paisner, a partner in Ripco Real Estate. “There’s a lot of hot air in that balloon.” At a time when consumers are watching their spending, “tenants need to operate stores that make money. They’re not there to justify landlords’ acquisition costs.”

“Rents have surged over the past few years, which has made it more difficult for retailers to renew leases in locations where they’ve operated for so many years,” said Jared Epstein, vice president and principal of Aurora Capital Associates. “To survive and flourish, retailers have to innovate.”

Jason Pruger, managing director at Newmark Knight Frank said retailers are opening temporary stores to test markets before committing to long-term leases. “Fifth Avenue is definitely an advertising play with rents hitting $4,000 per square foot,” Pruger said. “Madison Avenue retailers have trouble making money when the rent tops $1,000 per square foot.”

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