Last week I, along with 32,500 of my friends, attended the annual ICSC convention in Las Vegas. Without a doubt, this was the most optimistic our industry has been since 2007. However, unlike past rebounds, which involved short memories, the current bout of optimism seems to be tempered by a sprinkling of caution. There are multiple reasons for such optimism.
One, employment continues to improve. The current unemployment rate of 8.1 percent is down by 20 percent compared to this time two years ago. When consumers are working, they spend, and such spending drives two-thirds of our country’s economy. Two, inflation remains in check and interest rates remain low. This puts additional dollars in the consumers’ pockets. Three, the debt markets have opened up, resulting in lending to buyers and investors of real estate. Four, the capital markets are flush with cash and ready to invest. Even though all of this seems very positive, lenders and buyers are willing to fund only in a responsible and diligent way, unlike five or six years ago. And this is where the dose of caution comes into play.
Consumer confidence continues to bounce around, sometimes up and sometimes down. There has not been steady positive improvement in how we feel about the economy. Although unemployment has made strong improvement, it is still high, relative to historic numbers. Finally, the economic situation in Europe has created continued uncertainty and a ripple effect that undoubtedly impacts the U.S. financial markets. The end result? As an industry, we continue to get healthier, with retailers growing, shopping centers and other retail assets trading at competitive prices, and even new development starting to sprout up. But this is nothing new to those of us based in Texas. For the last 12-18 months, Texas has been the center of financial health, creating more new jobs and enjoying lower unemployment than anywhere else in the country.
Our real estate practice is thriving, both on the brokerage and investment sides of our business, and we expect this to continue. And based on the discussions and opinions of ICSC attendees, over time, the same is expected across the country. Alan P. Shor co-founded The Retail Connection LP in 2004. He serves as president and co-chairman and heads up the firm’s investment and merchant banking business. Contact him at email@example.com.