Physical retail still king, Trump, industry leaders tell NY National Deal Making
Physical retailers are thriving, as are the shopping centers they inhabit, and both will be around for a long time to come, said leading real estate executives Monday, at ICSC’s New York National Deal Making.
“The fundamentals of the business are incredibly sound,” said Daniel B. Hurwitz, CEO of DDR, noting that occupancy, sales and rents are high and rising. Hurwitz was joined in a panel discussion by Kenneth F. Bernstein, president and CEO of Acadia Realty Trust; David E. Simon, chairman and CEO of Simon; and Don Wood, president and CEO of Federal Realty Investment Trust.
Investors are also upbeat on the industry, noted Bernstein. “There’s a lot of capital out there for the right deals.”
But for all that, the news media is giving the industry a bad rap, Simon and others complained. “The mall business is good and strong,” said Simon, accusing media outlets of distorting the picture by habitually presenting shopping centers as a dying industry. “The media is just crazy.”
Executives also took the news media to task for making too much of the Black Friday weekend sales, which according to some trackers declined this year. Historically key days in the holiday season have lost their importance as the buying season has extended at both ends, Hurwitz said. “Who cares how good Black Friday was,” he said. “The holiday shopping seasons probably goes until January 15.”
As further evidence that the mall format remains relevant and robust, centers are proliferating around the world, and retailers are populating them, Simon noted. Moreover, e-tailers are increasingly depending on physical stores to grab the attention of consumers, he and others noted. “They need the physical environment,” Simon said.
Shopping centers offer not just merchandise, but a social environment and entertainment, elements that online shopping can never offer, noted Wood. Landlords are rising to the challenge posed by online retail and are making centers even more entertaining by bringing in top quality restaurants and other service tenants, he and others said. “We have a plethora of new concepts that have been created,” Hurwitz said.
“We have upped our game,” agreed Wood.
Bernstein and Hurwitz also warned against making too much of the supposed trend for smaller stores, driven by the online revolution. When flat-screen TVs were flying out the door at Best Buy, no one was talking about a need for smaller stores, Hurwitz observed. But when 3D TVs proved a hard sell, everyone said Best Buy needed to shrink. But for all the talk, the retailer hasn’t reduced its store sizes in DDR’s portfolio, he said. “It’s not about the box,” he said, “it’s about what’s in the box.”
Donald Trump, in a separate keynote address, noted that retail is a keystone of his residential and office projects around the U.S. “I also like to build parking garages with retail,” he said, noting that it not only generates sizable rental income, but makes properties attractive to non-retail tenants. “So I just have a warm part of my heart for retail, for shopping centers and for retail people.”
Trump also noted his preference for physical retail over Internet shopping. “I want to touch it and feel it,” he said. “I love real estate and I love shopping centers.”
More than 9,000 executives are attending the three-day New York National Deal Making, which for the first time this year is being held at the Javits Center.
