Cannabis, happiness and other key takeaways from ICSC’s 2018 New York Deal Making Conference
Dec 20, 2018 Susan Elsbree
At this year’s International Council of Shopping Centers (ICSC), which brought together tens of thousands of professionals in the real estate and retail industry to talk about emerging trends, one thing was clear: the shopping and development landscape is changing rapidly.
But how it’s changing is surprising. Despite concerns about how online shopping is affecting bricks and mortar, the conference’s opening session speakers boasted of strong in-person results between Thanksgiving and Cyber Monday that surpassed last year’s sales as more brands leveraged their digital channels to drive in-store traffic, consumer confidence was up, and 64% of click-and-collect shoppers made an additional in-store purchase once they were there.
Whether good storefront sales remain in 2019 is uncertain, three trends did emerge that will make next year one of the most dynamic in recent memory.
#1: ‘Happiness’ is the new buzzword.
Mental health dominated many of the conference’s panel discussions. Cigna’s May 2018 report revealed loneliness is at epidemic levels; nearly half of Americans report sometimes or always feeling alone (46 percent) and developers are taking note that they can help solve a serious mental health crisis and make retailers and developments more profitable at the same time. Landlords are changing their tenant mix and programming their open spaces to create meaningful, fun, human-to-human interactions. This trend is coinciding with the evolution of experiential retail, emphasizing food, services, entertainment, health and fitness.
#2: Cannabis could save Main Street.
Dubbed the new ‘credit tenant’ (actually federal law seems to be getting in the way of this, but I digress) the legal cannabis industry is the fastest growing market in the world, expected to generate $57 billion globally by 2027 as countries throughout the world continue to legalize its use and demand continues to grow exponentially. It’s also the fastest-growing employer in the national economy, employing some 160,000 people, and growing (pun intended). So what does the explosion of this market mean for the real estate business? Well, everything. Cannabis is not just a virtual business. It needs land to cultivate, industrial space to manufacture and warehouse product, and bricks and mortar to reach insatiable consumers. Savvy brokers, developers and lawyers are teaming-up on zoning battles, community relations campaigns and build-to-suit development sites and as a result, many cities and towns are seeing a real estate boom powered by an unlikely presence. Our firm’s growing cannabis practice has worked with Eaze and TILT to shift cultural perceptions, particularly media representation of the average cannabis user. Those same tactics can be deployed to gain entitlements from cities and towns across the county.
#3: Digital transformation is finally happening.
Real estate is one of the last sectors to innovate but new technology and a willingness to change is creating meaningful change. ICSC’s Innovation Exchange pavilion featured the latest products, digital experiences, emerging technologies and data integration tools that are changing the way investors and start-ups are viewing this once-plodding legacy industry.
Real estate technology (or ‘proptech’) is quickly becoming its own category. Venture capitalists are raising hundreds of millions of dollars to invest solely in this space. Also, some of the world’s largest landlords have built venture capital arms to get in on the action as commercial brokerage firms have launched investment funds and incubators to do the same.
Proptech is not limited to innovations in the traditional ways of buying, selling, renting and managing properties, although companies like InkHouse’s client Lease Pilot, are certainly transforming how deals are getting done. From hospitality, retail and storage to modular building, construction robotics and home security, new technology is being invested to improve how we efficiently utilize the built environment. It used to be real estate companies dabbled in tech, but in 2019 and beyond we’re seeing tech companies not just dabble in, but totally disrupt real estate.
If you also attended ICSC, please share any additional trends or ideas you learned by emailing our team at firstname.lastname@example.org. We'd love to hear from you.