Revamping Real Estate: ICSC New York’s Bold Ideas on Housing & Taxes!
As the ICSC New York convention kicks off this week, the buzz surrounding the transformation of unused spaces—from parking lots to vacant pharmacies—is palpable. Here lies an array of challenges and golden opportunities just waiting to be explored.
“Much of the dialogue will be focused on the glaring shortage of available tenant space,” reveals Stephanie Cegielski, the insightful vice president of research and public relations at ICSC. “With occupancy rates soaring, the reality is that new spaces are few and far between.”
Cegielski also anticipates robust discussions on the Federal Reserve’s moves to potentially ease interest rates. “This year has seen two encouraging rate cuts. While they’re not sky-high, they are elevated compared to what developers are used to,” she adds. Currently, the federal funds rate hovers between 5.25% and 5.50%.
With high interest rates and an oversupply of retail space, the opportunity for new ground-up developments or substantial renovations has dwindled. However, imaginative owners and developers are pivoting towards building new housing in tandem with shopping centers. This strategic approach not only alleviates community housing shortages but also enhances the local customer base for retailers, increases convenience for shoppers, and elevates property value.
Other hot topics at the ICSC convention include the significant downsizing of pharmacies, as hundreds of locations shutter their doors, alongside exciting renovations at major airports like JFK, LaGuardia, and Newark, which are actively courting new tenants.
Real estate leaders are buzzing with anticipation about leveraging foot traffic analytics to boost consumer engagement. There’s also a keen interest in the potential extension of the 2017 Tax Cuts and Jobs Act, set to expire in 2025. While some argue that an extension could spur economic growth, others caution against further cuts, citing concerns over the federal deficit.
To adapt to changing needs, many property owners are appealing to local governments for relaxed parking requirements, allowing them to repurpose underutilized spaces. With parking lots often empty except during peak shopping seasons, this shift could be game-changing. Some are also requesting waivers for expensive electric vehicle charging stations.
As notable retailers like Macy’s and RiteAid close their doors, developers are seizing the moment. They’re creatively converting these spaces into residential units or even demolishing large-format stores to build anew. Case in point: Macerich is transforming the FlatIron Crossing Mall in Broomfield, Colorado, into a dynamic mixed-use space that includes housing. Kimco Realty is making waves in Daly City, California, turning a former Burlington Coat Factory into living spaces, while Westfield’s Garden State Plaza in New Jersey adds apartments to its offerings.
Take, for example, the Sears store in Portage Park, Chicago, which metamorphosed into 6 Corners Lofts—a stunning 206-unit loft apartment complex featuring a Target, a glass atrium, a rooftop lounge, and a sparkling pool. This impressive transformation came with a $90 million price tag.
When housing isn’t the answer, many abandoned department stores are being repurposed as distribution centers or sports facilities. Additionally, a growing trend shows an influx of service providers such as healthcare facilities, fitness centers, and yoga studios filling these once-vacant spaces, according to Cegielski.
Brixmor Property Group is making strides in Naperville, Illinois, with a redevelopment project called Block 59, set to transform Heritage Square into an enticing restaurant district. With demolition already underway, new eateries are anticipated to open their doors in 2025, with the project slated for completion by 2026.
At the ICSC New York convention, taking place at the Javits Center, an estimated 8,000 attendees are expected—matching last year’s turnout. A diverse crowd of domestic developers, retailers, property owners, and service providers will converge, alongside a smattering of international guests. If the economy stays on its current trajectory, future conventions could see pre-pandemic crowds of up to 10,000, highlighting a promising recovery trajectory.
This year’s ICSC New York boasts 286 exhibiting companies and 11 engaging content sessions, utilizing over 131,000 square feet of the Javits Center’s exhibit space. It’s the second most significant event for ICSC, following the spring convention in Las Vegas, which typically draws around 25,000 attendees. ICSC’s mission? To champion all types of marketplaces—malls, lifestyle centers, and more—where communities shop, eat, work, and gather. Attendees will dive into discussions about ongoing projects, available spaces, industry trends, and exciting lease opportunities.
Across the U.S., approximately 112,000 shopping centers exist, showcasing everything from traditional malls to vibrant outlet complexes. A particularly intriguing development is Belmont Park Village, a 340,000-square-foot luxury outlet shopping destination on Long Island, poised to house around 160 shops adjacent to the famous Belmont Park racetrack.
The atmosphere at ICSC New York promises to be electric, with real estate investment trusts celebrating high occupancy levels, rising rental incomes, and an influx of consumers returning to physical stores this holiday season—an encouraging sign post-pandemic.
“Demand for our spaces from a diverse palette of tenants remains robust, and we are continually enhancing our unique retail real estate platform through our expanding development pipeline,” stated David Simon, CEO of Simon Property Group, during a recent quarterly conference call.
Despite concerns surrounding potential tariffs imposed by the previous administration, consumer spending remains resilient, holding strong in the face of rising interest rates and inflation.
“There was a fantastic turnout over the Thanksgiving weekend,” Cegielski noted. “Foot traffic is returning to levels we saw before the pandemic.”