SAN DIEGO—Even though the recession is all but behind us, consumers still want to make sure they're getting the best deal at retail, which bodes well for outlet centers, said ICSC chairman Stephen Lebovitz, president and CEO of CBL & Associates Properties Inc., during ICSC's Western Division Conference here last week. During one session, Lebovitz was being interviewed by ICSC's program-planning committee co-chair Timothy Jackson, VP of Wallace Properties Inc.
Jackson asked Lebovitz what trends he was seeing in retail real estate in the various parts of the country where his firm holds shopping centers. Lebovitz said, “Our centers were backwards in occupancy during the recession, but we were able to backfill that space.” He said we are in one of the best scenarios we've had in years with regard to occupancy.
When Jackson asked him if any retail projects in particular stand out, Lebovitz said when he was at an ICSC conference in San Francisco last month, he toured a Westfield facility that offered co-working space for incubating retailers, even space and a heavy investment in technology. “They're really taking advantage of the tech market in San Francisco. We're all adjusting to the changes happening in this space.”
Jackson asked about his view on retail renovations, and Lebovitz said, “There's still a lot of retail space—we're either over-retailed or under-remodeled, depending on whom you ask. We need to make centers relevant to customers via renovations. There are new retailers and more restaurants in centers, and sales are up. As a property owner, the biggest challenge is to make your property fresh and exciting so people will want to come—redevelopment is the best way to do that.”
Lebovitz added that there are few new malls opening, but redevelopment makes the emergence of new retail the equivalent of 50 new malls throughout the county. He also said that open-air centers are growing in popularity.
Jackson asked about the outlet sector, and Lebovitz said his firm looked at it for a while. “The sector strengthened over the recession. Value is still a key factor for the customer. Outlet shopping is exciting, they can find good deals, and it's good business for us. With the income gap among consumers, outlets offer a good value proposition based on the pricing of merchandise.”
Jackson asked about the threat of online retailing and how it has changed shopping centers. Lebovitz said, “Online retailing has disrupted categories like books, cards and other goods. The dialogue has shifted. Investors are trying to figure out how the omni-channel world works. Plus, online retailers, like Amazon, are now opening stores—it's a reality. Still, online is still a relatively small percentage of retail sales; it's only about 6% or 7%. Retailers and shopping centers are embracing it.”
With regard to helping landlords make their properties more attractive technology-wise, Lebovitz said that some entities are investing in labs and idea-generating concepts such as Westfield labs to create opportunities in technology. “We are putting in fiber optics because retailers need the infrastructure early in the process, but there are a ton of possibilities. ICSC can help members understand where this is going—you don't want people to make a Betamax decision.”
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Carrie Rossenfeld
Carrie Rossenfeld is a reporter for the San Diego and Orange County markets on GlobeSt.com and a contributor to Real Estate Forum. She was a trade-magazine and newsletter editor in New York City before moving to Southern California to become a freelance writer and editor for magazines, books and websites. Rossenfeld has written extensively on topics including commercial real estate, running a medical practice, intellectual-property licensing and giftware. She has edited books about profiting from real estate and has ghostwritten a book about starting a home-based business.
