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Economic Downturn Leads to Downsized Event

Organizers and participants still deem it crucial in the realm of retail property deal-making. But the International Council of Shopping Centers’ annual spring convention in Las Vegas, taking place May 23-25, has been downsized this year, from four days to three.

Some 30,000 people from around the globe are expected to attend — on par with last year’s tally, but nearly 40 percent below the 48,000 who jammed the Las Vegas Convention Center for the same event in May 2008, according to organizers with the trade group.

While overall retail deal-making has slowed considerably since then, in the wake of a massive downshifting in U.S. consumer spending, the New York-based shopping center council says its spring convention, called ReCon, remains the place where about 25 percent of the retail industry’s real estate transactions are either initiated or finalized.

“There’s a lot of naysayers out there, and a lot of people who don’t want to be standing or walking in the convention crowds for three days,” said Mike Clark, a retail broker in the San Diego office of Cassidy Turley BRE Commercial. “But this is still a must-attend convention in my view.”

Clark is among 15 to 20 representatives from that firm who were planning to attend, and they in turn are among dozens attending from San Diego County, including brokers, shopping center developers and owners, and leaders of construction companies and government agencies involved in economic development.

They’ll be looking to meet — and make deals — with decision-makers from major retail companies, restaurant chains and shopping center operators.

Still an Important Convention

“You have the chance to be face-to-face with people you otherwise would never see,” said Clark, who is attending for the 16th time. “It’s important for them to place a name with a face.”

Clark says regardless of what’s happening now with the economy, contacts made at this year’s convention can bear fruit in two to five years. “We’ve just had a long period in retail where there was not a lot in the pipeline of transactions,” he said.

“I just heard from a restaurant client who said they were looking at some local expansion,” he added. “To me that’s amazing after what we’ve been seeing the last year or so.”

The trade group’s spring convention, held since 1958 but exclusively in Las Vegas since 1986, in past years has drawn high-profile industry panelists and speakers, including President Clinton and national political leaders of both major parties. Scheduled to speak May 24 were former Labor Secretary Robert Reich and Nordstrom Inc. President Blake Nordstrom.

Entrance to the gathering is not cheap. The per-person cost for this year’s full convention program ranged from $360 for ICSC members who registered before the end of December, to $575 for those who signed up after April 30. Those prices are doubled for nonmembers wishing to attend.

ICSC spokesman Jesse Tron says this year’s convention was shortened and streamlined in response to participants looking to trim travel and other costs amid a still tough economy for the retail industry as a whole.

Educational and deal-making sessions have been scheduled so that desirable sessions don’t conflict with each other, and the three-day run time, instead of four days, will let participants leave on a Tuesday night and save on hotel expenses.

Gauging the Mood

Organizers say the convention consistently grew from 2005 to 2008, approaching 50,000 visitors at its peak during the economy’s boom years. But that changed after the recession hit, causing shoppers to pull back in spending, leading to a rise in store closings and vacancies, with new retail real estate development grinding to a virtual halt.

“The individual delegations are not as big as they were before, but the main decision-makers are still coming,” Tron said of this year’s gathering. “They do still feel it’s important to maintain a presence there — to build new relationships and maintain their current ones.”

Clark says the Las Vegas convention is a good venue for gauging the mood of national retailers. He will be watching this year for signs of interest among certain bellwether retailers — such as grocery stores, drugstores and big-box chains — in establishing new locations.

Locally based development companies will also be pitching their upcoming retail center projects at the Las Vegas gathering. Paul Buss, president and principal of OliverMcMillan, says the company will be looking to snag tenants for developments in California and Washington state.

“We’re not expecting a whole lot of deals to actually get done there, but there are a few projects we’ll be promoting,” Buss said. “Overall, the deals are not happening like they were maybe three or four years ago.”

Plenty of Bang for the Buck

John Jennings, a senior director with broker Cushman & Wakefield Inc.’s retail advisory team in San Diego, says that office will have about 20 attending the convention. This will be Jennings’ 14th consecutive annual trip to the gathering, and he and his colleagues have been planning their ICSC meeting strategies since January.

Jennings, who represents primarily landlords, says his three-day schedule will be filled with meetings with retailers, including Fresh & Easy Neighborhood Market Inc., Henry’s Farmers Market, Bridgestone/Firestone tire stores, and discount merchandisers.

At a time when all types of retail-related companies have been cutting back, and retailers are making precise location-by-location analyses of where to place stores, Jennings says the spring convention remains the place to meet up with retail executives that local brokers and developers would otherwise never get to speak with in person.

“Even the people who have cut back on going to other conventions realize that this is the one where you’re going to get the most bang for your buck,” he said.

Recent national sales figures have brought some cheer to the retail industry. The U.S. Commerce Department reported May 14 that April retail sales, including autos, gas stations and restaurants, increased 0.4 percent seasonally adjusted over March, and rose 9.3 percent unadjusted over April 2009.

“But maintaining this sales momentum will be challenging,” said Matt Shay, president and chief executive officer of the National Retail Federation, another trade group, in a statement responding to the news. “Until our economy begins to create jobs and reduce unemployment, the breadth and sustainability of this recovery remains uncertain.”

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