In this video Tom McGee, CEO of ICSC (International Conference of Shopping Centers), is interviewed. The conversation revolves around the current state and future outlook of the retail property sector in commercial real estate, as McGee shares strategies for retailers and property owners, and a forecast for US. retail properties.
The interview begins with the hosting highlighting the resilience and evolution of the retail sector despite challenges such as the internet’s impact, the COVID-19 pandemic, and changing consumer behavior. The discussion also touches on challenges faced by commercial real estate sectors in general, such as insurance costs, crime issues in downtown areas, and the impact of higher interest rates on tenants and ownership groups.
Tom McGee introduces ICSC, stating that it has over 50,000 members representing various stakeholders in the retail industry, including owners, developers, retailers, tenants, and service providers. ICSC has been around for almost 70 years, offering a platform for networking, conferences, research, and public advocacy.
The conversation shifts to the performance of the retail sector, with a focus on suburban retail experiencing strong demand, especially in open-air spaces. McGee mentions the lack of new supply in retail real estate over the past 15 years and how the pandemic accelerated the use of retail spaces for alternative purposes like click and collect and curbside pickup.
Urban retail faces challenges, particularly with the impact of organized retail crime. McGee emphasizes the importance of addressing organized crime through legislation and increased enforcement. The discussion also touches on the significance of retail in communities, contributing to sales tax revenue and property tax revenue.
Host Michael Bull mentions the demand for shopping centers and strip centers, and McGee predicts that the future performance of retail properties will remain strong due to the lack of supply and increased demand. However, he acknowledges potential challenges in the capital market due to rising interest rates.
The conversation then delves into strategies for landlords and tenants in the current market. McGee emphasizes the importance of location, property curation, and staying competitive in the marketplace. He advises landlords to invest in property aesthetics and amenities, adapt to changing trends like curbside pickup, and consider electric vehicle charging stations to utilize underutilized parking spaces.
For tenants, McGee stresses the timeless importance of merchandising, customer service, and investing in store networks. He encourages retailers to adapt store layouts to support online sales efficiently and to provide a positive in-store experience that differentiates them from online shopping.
The podcast concludes with McGee expressing optimism about the retail industry’s long-term prospects, despite challenges like inflation and interest rates. He believes the demand-supply mismatch and the resilience of the industry position retail real estate favorably in the long run.
Overall, the conversation provides insights into the current dynamics and future outlook of the retail sector in commercial real estate, offering practical strategies for both landlords and tenants.