I just returned from the ICSC National show, the 2nd largest retail show in the country.

Optimism was fairly decent, but then again it’s a retail conference. A few things I heard on the floor and in the taxi lines:

• If investors are willing to risk secondary equity at 12%, we may be closer to the end of the current cycle, and that might not be a bad thing. As the saying goes, “Make the money in the down cycles and hope you keep it on the up side.”
• Decision-making is more scrutinized all the way around – Lenders, LL, Tenant. It’s a longer process, and you’ve got to hit the mark the first time.
• Urban locations are on the radar, and 18-hour cities are the search.
• The investor community is getting more comfortable with mixed-use retail. The sweet spot for many is that $20 to $30 million project in secondary markets.
• Grocery store cap rates are stabilizing, and we’re seeing some longer terms.
• Folks from across the pond are showing increased interest in the U.S. market.

To me, the bottom line is that the investor community needs “retail/multifamily” development to help satisfy the equity that is out there. This year, only about 60 million sf of new retail GLA was developed. Prior to 2008, it was 3x higher. It will be the creative ones that are successful.

I do surely remember those days in the first part of the last decade when companies like Lowes, Home Depot, Target and Wal-Mart were producing a new store a week, plus the juniors. Zero equity was required. That time has passed us for good, I am thinking, and it’s probably for the better for the industry’s long term players and, not the wannabes.