The annual ICSC Convention in Las Vegas is a highly anticipated event for professionals in the commercial real estate industry. As the premier gathering of retailers, developers, investors, and other key players, it serves as a barometer of the market’s health and provides valuable insights into current trends and future prospects. The 2023 convention brought together industry leaders who shared their thoughts and experiences, painting a picture of cautious optimism for the year ahead. Below are a few key takeaways from the event that I wanted to share.
1. Retailers are still active, but with a bit of caution:
Despite the challenges faced by the retail sector in recent years, the ICSC Convention revealed that retailers are showing resilience and cautious optimism. This sentiment reflects a renewed sense of confidence in the industry’s ability to adapt and thrive in the face of changing consumer preferences and the rise of e-commerce. While retailers remain cautious, they are actively seeking opportunities to expand and refine their strategies to meet the evolving needs of customers.
2. The show was well attended:
The high attendance at the ICSC Convention is a testament to the enduring relevance and importance of this event. Industry professionals from all corners of the globe gathered in Las Vegas to connect, learn, and collaborate. The strong turnout indicates a collective desire to stay informed, forge new partnerships, and gain a competitive edge in the marketplace. The vibrant atmosphere and exchange of ideas fostered during the convention bode well for the industry’s future growth and innovation and left our team with a renewed energy coming back home.
3. 1031 Buyers are few and far between, cash is king for smaller NNN buyers:
The current market conditions have impacted the presence of 1031 buyers, who utilize tax-deferred exchanges to invest in commercial real estate. While they may be fewer in number, buyers with cash on hand, especially smaller triple-net (NNN) investors, are still actively seeking opportunities. The allure of stable income streams and the potential for long-term appreciation continue to attract investors looking to diversify their portfolios with commercial properties.
“The overall sentiment at the 2023 ICSC Convention can be summed up as cautious optimism for the year ahead. This sentiment was pervasive among attendees, suggesting a collective belief that the industry is on a path to recovery and growth.“
Aubrey Linville
4. Construction loans are around 50-55%:
Insights shared by developers at the convention shed light on the financing landscape for new construction projects. Construction loans, which play a crucial role in funding these endeavors, were reported to be in the range of 50-55%. This figure indicates that lenders are maintaining a cautious approach, balancing the potential risks associated with new developments while still supporting the growth of the sector. Developers should consider this range when planning their projects and securing necessary funding.
5. Institutional capital still available for the best deals, but it’s expensive:
For those involved in commercial real estate, securing institutional capital remains a viable option for financing the best deals. Institutional investors continue to deploy their resources, albeit with a discerning eye for projects that offer exceptional potential returns. However, access to this capital comes at a cost, as institutional financing is often accompanied by higher interest rates or other expenses. Developers and investors need to carefully assess the benefits and trade-offs when considering institutional financing for their projects.
6. Cautious optimism for next year amongst everyone I spoke to:
The overall sentiment at the 2023 ICSC Convention can be summed up as cautious optimism for the year ahead. This sentiment was pervasive among attendees, suggesting a collective belief that the industry is on a path to recovery and growth. While challenges and uncertainties persist, professionals in the commercial real estate sector are confident in their ability to navigate and adapt to changing market dynamics. The cautious optimism expressed by industry leaders provides a hopeful outlook for the future of the commercial real estate landscape.
Attending the 2023 ICSC Convention in Las Vegas was an invaluable experience for our team, as it provided us with a comprehensive view of the current state of the commercial real estate industry. As always, we are glad to have had the opportunity to represent our clients and engage with fellow professionals who share our passion for this dynamic field!