What is your takeaway from the International Council of Shopping Centers conference this year?
My sense is that attendance is up from last year. I think we’ll have about 32,000 to 33,000 people, which is better than last year’s 30,000 attendees. So that’s good. I was having a conversation with the board of trustees for ICSC, which has most of the major tenants and owners, and the talk is upbeat. Tenants are complaining about high rents and landlords are complaining that rents are not high enough to build new development. Whereas two years ago rents were nothing and there wasn’t even a thought of new development. So that’s progress in how people see their businesses moving. A big question now is how much use do I make of the Internet? I was on a panel here and there is this new word: omni-channel. The use of the Internet and social media and bricks and mortar. You put them together and make more money than you would if you had just one or the other. That’s really the conversation and it’s a good conversation retailers think about distributing merchandise. TJ Maxx can distribute through strip shopping centers or a mall or a free-standing site. What they really want to do is sell, whatever the distribution channel, and so why not the Internet, too?
But won’t that cause stores to shrink and create vacancy and hurt the retail leasing market?
I don’t think anyone will know what the impact will be. New development might be curtailed and C-grade real estate that is not well located or is antiquated will maybe see some impact.
How important is retail to your plans for the company? You seem really involved at ICSC.
I have come to ICSC for, I think, 25 years now. Starting back in ’83. Wow, that’s almost 30 years! I started with Jerry O’Connor [who passed away in 2010]. Jerry was my mentor. He was a property investor who built one of the finest shopping center portfolios as a chief investment officer at Corporate Property Investors, which is where I began. When he left I joined him and we invested for pension funds and endowments in retail-oriented projects mostly. We built The Westchester [to this day, a successful mall in White Plains] and then sold it to Simon [Properties]. At New Plan in 2000 we were predominantly involved in shopping centers. So I was CEO of companies that were all retail, and so retail is important to me. I feel it. And at C&W we’re making it an important part of our business. Our goal at Cushman is not to be everything to everyone. In retail leasing we’re focused on urban cities and that’s a real specialty. Whether New York or Chicago or San Francisco, Miami or Houston.
The conversation that we never want to have with a client is to go in and simply ask, ‘What’s for sale?’ Anyone can ask that. When you work with a public company, though, all of their assets are public knowledge and can be researched. We could find out everything about them, exactly what their strategy is, what their growth should be, what their balance sheets should look like, so we can go in and understand a company and ask them and suggest to them how can we help them achieve their goals and add value. As a CEO at a company like Centro, that was the kind of pitch I wanted to hear.
So is retail becoming a focus of yours at Cushman?
Look, overall we want to focus on all our service lines and property types.
You’ve mentioned in recent months that you want to grow Cushman & Wakefield’s real estate investment fund business. Is that still a priority?
We have $5 billion of assets under management and we’re starting to think about how to grow those more dramatically. We started a fund called “Pure Retail” that raised $100 million euros to invest in high street retail in Europe, and we just closed three transactions with that money this year and last.
Are you going to try to ramp that up in the States?
That’s been my background, but you need a real organization to do it and it’s not easy raising money today without a track record. Blackstone can raise money because they have a track record. We’re looking to do it by exploring joint-venture partners that can create a better product or merge our fund business. But we don’t have anything planned yet.