Arose in the Desert
ICSC 2023 in Las Vegas was an invigorating reminder of why we strive for better every day.
To no one’s surprise, the 2023 installment of ICSC Las Vegas was a memorable one. On the Las Vegas Convention Center floor, the event felt busier than it had in years past, perhaps in part because what was formerly a three-day conference was distilled down to two days.
Every ICSC event has its own personality, with key themes and hot topics that seem to be dominating conversations both inside and outside the convention center. Here’s what stood out to me this year:
Tenant Disparities
There was a clear tale of two cities’ disparity, with tenant activity generally robust from some brands like Burlington showing much interest in absorbing space—and others like Tuesday Morning, Party City, and Regal clearly in a very different place. I’m hesitant to draw broad conclusions from one event, but that haves-and-have-nots dichotomy bears watching moving forward.
An Ongoing Disconnect
A significant disconnect remains between the cost of building a new center and the current leasing market. Once you factor in the continued high-interest rates, it’s not hard to see why recent construction activity is down. A similarly sluggish transaction market indicates the same disconnect between buyers and sellers. While inflation has eased somewhat, it remains stubbornly high. With labor and material costs high and consumers rather squeezed by cost-of-living increases, the road ahead looks to remain bumpy for the foreseeable future. There’s still a lot of sector-to-sector performance variation, but no one is immune.
Owner/Operator Priorities
From conversations with peers, there is general agreement that there is still plenty for us to do on the operational side to keep retail tenants successful, satisfied and renewed.
Tenant retention is always a priority, but with lots of competition for quality space, there is general confidence that there is still room to grow with rents—especially for quality spaces. With quality vacancies in short supply, there are opportunities to attract targeted tenants and curate your tenant mix. On the tenant side, there is a heightened appreciation for the right landlord partner, not only when it comes to leasing negotiations and operational optimization but also when dealing with issues like site security, which is a concern for many retail centers.
Savvier Consumers
I was recently quoted saying, “The consumer is recalibrating.” What I mean by that is that growing numbers of consumers are becoming more sophisticated buyers, using the new tools and transparency available to them to figure out where and how to get the best pricing.
Retail professionals must evolve accordingly as consumers continue to become more adept at navigating brick-and-mortar and online spaces and balancing the different price, convenience and service considerations that shape their shopping decisions. Brands and centers must remain keenly focused on figuring out exactly who their consumers are, where their loyalties lie and ensuring they are giving them what they want and need.
Tech Looms Large
Fittingly enough, for a city well known for its high-profile tech conferences, there was a greater emphasis on and prevalence of retail technology innovations than at past ICSC events. The percentage of tech providers with a presence at the conference went from zero recently to a significant and noticeable presence in 2023. Data gathering and analytics tools provider Placer.ai had two booths.
At NewMark Merrill, we have long prided ourselves on being ahead of the industry curve regarding tech adoption and utilization. But the ubiquity of tech at the conference was a reminder that, as new tools become more mainstream, tech differentiation is constantly diminishing. Tech advantages are temporary. What isn’t temporary is your mindset and your approach as a retail owner/operator.
Companies that consistently have not just a tech-friendly attitude but a resolve to keep investing, keep innovating, keep building and keep finding ways to leverage new technology in new and exciting ways. There will always be an advantage for those who understand the value of operating on the cutting edge.
People Power
For all the buzz about new tech and media curiosity about AI, I think the biggest story in Vegas wasn’t digital; it was social. Facetime with clients, meetings with new connections, and interviews with representatives from media outlets all feel so critical—perhaps more so than ever before. And the social elements that have long been a big part of what makes this event unique were still popular and well-attended. I’m biased, but I thought NewMark Merrill’s Brew-Ha-Ha event was a highlight of the conference social calendar.
Our team held over 200 individual meetings and welcomed over 450 people to our party at the Beer Garden at Paris Casino. All of this is a fitting and perhaps even poignant reminder of how much we crave connectivity and human connection—in our retail environments as much as in our retail conferences. And that brick-and-mortar spaces that accommodate and even facilitate those in-person experiences and connections will continue to set the industry standard.