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Brad M. Hutensky ICSC Chairman May 9, 2013 22 nd Annual Connecticut Commercial Real Estate Conference.

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Presentation on theme: "Brad M. Hutensky ICSC Chairman May 9, 2013 22 nd Annual Connecticut Commercial Real Estate Conference."— Presentation transcript:

1 Brad M. Hutensky ICSC Chairman May 9, nd Annual Connecticut Commercial Real Estate Conference

2 Retail Real Estate Overview The International Context Internets Impact on Bricks & Mortar The Opportunities in US/CT Retail

3 Why Is Retail Exploding Globally?

4 Have Seen Growth First Hand In Brazil: 44 Malls in next 24 months In Brazil: 44 Malls in next 24 months In Middle East: Malls being built EVERYWHERE! In Middle East: Malls being built EVERYWHERE! In China: 24.5 Million Sq. Ft. in Tianjin In China: 24.5 Million Sq. Ft. in Tianjin

5 Shopping Center Space Under Construction 1.Tianjin, China 2.Shenyang, China 3.Chengdu, China 4. Abu Dhabi, UAE 5.Wuhan, China 6.Hanoi, Vietnam 7.Beijing, China 8.Shanghai China 9.Kuala Lumpur, Malaysia Xian, Shenzhen, Chongqing, Nanjing, Guangzhou China Source: CBRE 24.5 mm sf

6 Retailer: The Growing Middle Class $21 Trillion (Today) Global Middle Class Spending Projections $56 Trillion (2030)

7 Year-Over-Year Retail Sales Source: ICSC

8 GLA Per Capita GLA Per Capita 24.76

9 Mall Development

10 Every market is different Customers Wants & Needs Customers Wants & Needs Governments laws Governments laws Industry Norms Industry Norms

11 World Speaks Language of Retail 1 ) Product 2) Price 3) Convenience 4) Service 5) Experience

12 The Threat of E-Commerce

13 Will E-Commerce make Bricks & Mortar Retail Irrelevant?

14 Brick-and-mortar stores serve customers who end up buying online The internet has made shops obsolete in some towns Retail is dead, long live retail

15 The Internets Growing Share of Retail Sales 5.2% 1.6 % Source: U.S. Census

16 Showrooming: visit the store, study the product, shop online for the lowest price

17 Retailer Bankruptcies & Store Closures

18 BUT HERES THE TRUTH

19 Retailers Still Expanding Retailer Number of Units - Next 24 months Subway5,000 Dollar General1,300 Five Guys Burger and Fries1,200 T-Mobile600 Walgreens571 Zara450 Taco Bell400 Wal-Mart300 T.J. Maxx150 Famous Footwear100 Macys20 Source: RBC Capital Markets

20 Where We Buy Depends on What We are Buying Buy on the Internet books, music, shoes computer software, video games Buy at Stores Mens suit, hair cuts, home furnishings, groceries, apparel, pharmaceuticals

21 Need for Human Contact Trip to the Mall

22 Need for Human Contact Trip to the Theater

23 Advantages of the Store Immediate gratification Cash purchasers Exchange/return Omni Channel

24 Retailers with Major B&M Presence Are 12 of the Top 20 Highest Online Sellers Source: The Top 500 List

25 Conclusion Customer is changing Successful retailers are changing too Internet is driving efficiencies in pricing, inventory and customization

26 U.S. Retail Real Estate Markets

27 U.S. Retail Real Estate Market in Brief 113,355 Shopping Centers = 7.5 Billion sq ft of GLA in 2013 Creates 18 Million Jobs Modest sales increases Minimal New Development Only 1 Mall opens in 2012 About 46 new open air centers open YTD

28 Three Observations About U.S. Retail R.E. Markets We dont need more supply, mostly Bifurcation of Capital – A Properties get lots of attention – Non-stabilized, smaller market, lesser tenants get little attention Lender Balance Sheets are swollen

29 Where are the opportunities? Redevelopment (aging stock; best locations) Urban/Mixed Use Serve the new population growth

30 Repositioning Opportunities

31 Age of U.S. Shopping Centers ~80% More than 15 years old

32 e-Commerce Creates Opportunity As store sizes become smaller … – Re-tenanting upside – More locations per market – More new development

33 Why Governments Embrace Retail Real Estate $1 million in sales$1 million in sales at a brick-and-mortar store nearly 4 jobs creates nearly 4 jobs. Catalyst for other uses (residential & office) tax revenue Retail attracts visitors and related businesses and generates tax revenue.

34 Opportunity from Population Growth

35 ~203 million people ~309 million people ~440 million people Growth US Total Population Redevelopment (aging stock; best locations)

36 Retail In Connecticut Follows US Trends Older stock: Lots of opportunity for redevelopment Population: we will get less than our share Urban/Mixed Use: – Blue Back Square: West Hartford, CT – Storrs Center: Mansfield, CT – Front Street: Hartford, CT

37 International Council of Shopping Centers in Brief

38 Total ICSC Membership 59,000+ U.S. 81% Other 5% Canada 6% Europe 7%

39 ICSC World Wide In 2012: 350 meetings; 100K+ attendees In 2012: 350 meetings; 100K+ attendees RECon Las Vegas, USA 32K registrants RECon Las Vegas, USA 32K registrants $57MM annual budget $57MM annual budget

40 ICSC Goal: Members Success Networking: a business of relationships Education: Learn from the experienced Research: All the information you need

41 Some Final Thoughts Retail Real Estate Truly Global: In Different Stages of Maturity (US most mature) Retail Real Estate Truly Global: In Different Stages of Maturity (US most mature) Massive Change = Massive Opportunity Massive Change = Massive Opportunity ICSC: Goal to help US & Growing International Members Prosper at Whatever Stage ICSC: Goal to help US & Growing International Members Prosper at Whatever Stage

42 THANK YOU!


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