RECon Report: What Is Going On???

OK. Things at the International Council of Shopping Centers RECon conference in Las Vegas are getting a little confusion. One person tells us that retailers are getting rent reductions and someone else says that they’re not budging on giving concessions. Someone says the recession is going to be over by the end of the year, and someone else will say that the commercial real estate industry will feel pain through 2012.

Our head is spinning, and it’s not just the heat.

So we’ll try to summarize what we heard today as best we can.

William Taubman, COO of Taubman Centers, contends that we’re in a “V-shaped recession.” They are offering rent relief to certain tenants, which he calls an “out of court settlement.” “Where the tenant is in difficult financial condition, we and others are giving rent relief.” We will have more from him on next week.

Mark Schurgin, a principal at the Los Angeles-based Festival Cos. says he thinks we’ll start seeing transactions soon, as companies get off the sidelines and start buying up the distressed assets out there. “The patient’s coming out of the ether,” is how he characterized it.

Richard Dube, president of Tri-Land Properties, clued us in on some interesting properties in Kansas City, where we grew up, and said to watch for a Paul Mitchell salon concept expanding.

Finally, Matthew Bordwin, a managing director of KPMG Corporate Finance, says that landlords need to give tenants rent breaks in this environment. “The natural progression is that they will lose tenants,” he says, if they don’t negotiate. He contends that future Circuit City situations can be avoided if we go this route.

That’s it for today. Look for our final blog from RECon tomorrow.


6 Responses to “RECon Report: What Is Going On???”

  1. 1 Dunkin'man May 21, 2009 at 2:48 pm

    The recession may be “V” shaped for the economy in general, but the mid to small developer of retail wiil be in the bottom of the “U” for more than 12 months.

    The responses were all over the board, with then genral consenus
    that we are at the bottom, but how long we stay there is will be
    different in each region and asset class.

  2. 2 ChrisAnn Richards May 21, 2009 at 4:56 pm

    It has been great to follow your updates about ICSC as this year I decided not to spend the time and $$$’s to attend…so I lived it through your updates. Thanks!

  3. 3 FashionPlayatICSC May 21, 2009 at 5:53 pm

    Attendees were dressed very conservatively this year. It’s truly an environment of playing it safe, on all levels. Kind of sad, for an industry built by colorful characters.

  4. 4 LongInTheTooth May 21, 2009 at 5:55 pm

    It looked more like College Career Day, than ICSC. Apparently, the well-paid players have been driven out of the game.

  5. 5 Les Minkus May 22, 2009 at 3:35 pm

    Confusing messages are being sent because let’s face it…. no one really knows what the future will hold. Unless the positive projection is coming from someone that already has all their financing in place to weather this storm, or the message is coming from someone that is facing the banks that are not lending money unless you have enough so you don’t really have to borrow from them, the messages are quite mixed.

    The banks are holding up the show for most of us right now and that’s because they are telling us what they should have been telling themselves several years ago, have appropriate, fair and supportable policies in place for borrowers to borrow and for lenders to lend. But they didn’t do that and now they are being irrational about lending requirements and charging ridicules fees if they’ll even consider lending to a borrower.

    The feds are forcing the banks to take newly printed money from the treasury and the banks have to pay the government interest for that money. So the banks want to pay it back as soon as possible and not lend it out as they are supposed to be doing.

    The SBA says that they will guarantee up to 90% of their programs when a bank loans money to a borrower that has been approved for an SBA package. But the banks are saying they won’t lend on most SBA approved deals because most are too risky for their current lending requirements, PLUS the fed examiners are punishing the banks for making any of these loans.

    Does anyone really know what they are doing these days to stop people from running around in circles?

  6. 6 Rob James May 26, 2009 at 10:58 am

    I thought it was one of the most manageable shows in 10 years. It was easy to get around in the convention center and easy to get a cab to and from it. Attendance appeared to be about one third of the normal by my estimate but people were busy.

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