The Innovating Commerce Serving Communities (ICSC) conference returned to New York this December with the convergence of 7,500 professionals at the Javits Center in Manhattan from the Marketplaces Industry at the ICSC NEW YORK convention, with fundamentals reaching their strongest point in years. Here is what we heard over the two days of events from dealmakers and experts who are driving innovation and evolution in the retail industry:

  1. Retailers are investing more in their physical stores instead of chasing online sales as in past years, with occupancies currently at an all-time high.
  2. The retail asset class is gaining more attention because of its strong fundamentals — low vacancies, limited new development, and rising rents — not to mention higher going-in cap rates.
  3. Demand is becoming stronger from institutional buyers like offshore funds and private equity. Retail properties, mainly freestanding fast-food restaurants, are gaining favor among commercial mortgage-backed securities investors. Life insurance companies are also interested in grocery-anchored retail and some power centers.
  4. High-interest rates are keeping the transaction market at a relative standstill and are stalling what new construction is planned. The gap between seller and buyer pricing expectations is wide but tightening.
  5. Experts anticipate retail investment sales to be more active and robust in 2024.
  6. While rising costs and shifting consumer spending patterns have hurt the bottom lines of many U.S. retailers this year, they kept their physical expansion going into the end of 2023 as the retail space occupied across the country climbed to a historical high.
  7. Various sectors continue driving the growth in demand for retail space, including food and beverage, fitness, experiential, discount, health and beauty, and medical services.
  8. More than a decade of minimal construction combined with persistent demand growth has led to a need for more institutional-quality space across many primary and even secondary corridors across the United States, which has piqued investors’ interest in retail assets.
  9. Total demand for retail space in malls rated three stars and below is projected to fall further in 2024 as numerous tenants accelerate their announced plans to relocate stores out of under-performing malls and into better trafficked, smaller centers.
  10. Landlords and property owners can monetize their retail properties through diverse avenues, including incorporating events, activations, installations, and implementing digital marketing strategies.