With ICSC Orlando, Florida’s largest retail real estate conference, wrapping up last month, we sat down with JLL’s Senior Vice President Paul Rutledge who attended and taught at the ICSC’s annual confab, to find out what he thought about this year’s conference, Florida’s retail market, and the state of malls.
How would you characterize this year’s Orlando ICSC convention?
I’d say it was the best meeting since the recession ended. There was so much enthusiasm, but it wasn’t effervescent, everyone was very practical and pragmatic and reasonable. Land prices and construction prices have gone up considerably, but they haven’t skyrocketed, and people strike me now as more disciplined. It’s a good equilibrium. And the influx of the grocery boom in Florida showed. It seems like everyone there had a deal to work on, a realistic deal, and that’s always good.
What surprised you most about the ICSC confab this year?
What’s surprised me the most is how many people are developing retail deals that aren’t just on the best corners but that they’re integrated into apartments and other uses — that’s a big step forward. Multi-use properties are now very well received, which allows for retail on bigger sites, so there are nuances that we’ve not seen previously.
How would you compare this year’s conference to, say, a decade ago?
There are a lot more young people now in the business than in 2008. For years since the recession the business was dominated by the old guard, but now there’s new blood and that’s good. And it’s not like it was a decade ago, with people just throwing money around and buying land to try and make a deal work. Today people are very businesslike. I’m not sure whether that’s because of folks’ bankers or because they have bad memories of a decade ago, but today things are metered, and yet there’s lots of work.
How would you characterize the Florida retail market today?
It’s fantastic. I’m not sure if Florida isn’t the best market in the country right now, in part because of the amount of available land and because construction costs are still rational. You can still buy land for projects in Manatee County, you can still buy land in Sarasota County, permitting fees are not overwhelming, and development in general isn’t as painful as it once was. The whole zoning process is more understandable now, too, as governments have come to realize the benefits of development in general. People today know by the codes what they can build and how much money is will cost. Florida is chock full of growth and stable incomes and jobs — what’s not to like?
What do you think about the state of malls in Florida?
In my opinion, here’s the deal with malls: They’re largely functionally obsolete as a single use; you only need one of them where years ago we thought we needed eight. Many of them are old, so they need to be retrofitted. I think the first thing that should happen is developers should put in residential. They typically have plenty of land, where you could do apartments, senior housing, workforce housing, townhomes, or student housing. And that helps with placemaking; I’m a big proponent of adding in public spaces, too, because that, in turn, draws people. And events. What if the mall were the site of the weekly farmer’s market or a local 5K race? So from there, you integrate the retail. It’s no longer the only thing. People looking to buy malls, in my opinion, get confused because they look at the buildings. But what you really need to look at is the infrastructure — the parking, the land, the access, the location. That axiom needs to be turned.
What concerns you about retail today?
Little stuff, like people who aren’t good at their business and folks who aren’t well capitalized. The electronics industry, I think, has really opened people’s minds up to the expansion of products — I call it the “Shark Tank Effect.” I think I get concerned about what’s happening outside of America and its potential impact on us, from trade wars to labor availability. Less somewhat are concerns about land prices getting out of control and inflation.
About the Author
Based in Tampa, Paul provides agency leasing, tenant representation, development, acquisitions and dispositions for the state of Florida. With more than 30 years of retail real estate experience, from national in scope to the first time retailer, Paul brings an enthusiasm, and experience targeted at client-focus success. Prior to joining JLL, Paul served as First Vice President, retail brokerage at CBRE where he represented institutional owners, tenants and developers.