WEBVTT - ICSC's McGee: Shift to Entertainment Retailers in Malls (Audio)

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<v Speaker 1>Broadcasting live to New York Bloomberg eleventh, to Washington, d C.

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<v Speaker 1>Bloomberg to Boston Bloomberg twelve, under It to San Francisco

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<v Speaker 1>Bloomberg nine six to the country US Exam Channel one nineteen,

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<v Speaker 1>and around the globe the Bloomberg Radio Plus Appen Bloomberg

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<v Speaker 1>dot Com. This is taking Stock. I'm Kathene Hayes along

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<v Speaker 1>with pim Fox. We're going to recon. It's the world's

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<v Speaker 1>largest retail real estate conference where a year's worth of

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<v Speaker 1>deals take place in just three days. This conference and

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<v Speaker 1>convention for the shopping center industry taking place right now

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<v Speaker 1>in Las Vegas and PM we're gonna speak to the

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<v Speaker 1>President CEO of International Council of Shopping Centers, who's got

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<v Speaker 1>a somewhat more upbeep of retail than we've heard on

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<v Speaker 1>this show. Well, that's good because shopping malls, they seem

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<v Speaker 1>to be dying a slow and ugly death. We're gonna

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<v Speaker 1>be taking a look at the world of shopping malls

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<v Speaker 1>and retail right now. Let's go to Charles Pellet in

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<v Speaker 1>the Bloomberg newser in Fort Bloomberg Business Flash. I think

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<v Speaker 1>of him. Thank you, Kathleen, just getting word of the

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<v Speaker 1>un Credits Chief executive officer Federico Gazzoni has agreed to

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<v Speaker 1>step down after almost six years at the helm of

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<v Speaker 1>Italy's biggest bank, as his efforts to improve capital and

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<v Speaker 1>revive profit lost the support of investors. He will depart

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<v Speaker 1>once a successor has been named. Stocks are rising the

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<v Speaker 1>most in two months today is increasing speculation the Federal

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<v Speaker 1>Reserve will raise rates this summer, sparks gains in financial shares,

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<v Speaker 1>while housing data signals the economy is strengthening enough to

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<v Speaker 1>support higher borrowing costs. Brad McMillan, chief investment officer at

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<v Speaker 1>Commonwealth Financial Network, says consumers are spending. Just look at

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<v Speaker 1>new home sales this morning, and what that's meant is

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<v Speaker 1>not the consumers can't spend, but that they haven't chosen to.

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<v Speaker 1>But it's also meant that once they choose to start spending,

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<v Speaker 1>there's a lot of dry powder. Speaking of spending, Best

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<v Speaker 1>Buy fell the most in more than four months, after

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<v Speaker 1>four were casting second quarter profit. The trailed animalists estimates

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<v Speaker 1>and announcing the departure of Sharon McCollum, who helped revamp

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<v Speaker 1>the company's operations and cut costs. Best By says McCollum

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<v Speaker 1>will step down as chief financial officer and chief administrative

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<v Speaker 1>officer after the company's annual meeting in June. Best Buy

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<v Speaker 1>shares down today by six point six percent to thirty

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<v Speaker 1>dollars and eighty four cents. Commerce Department said purchases of

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<v Speaker 1>new homes searched in April to the highest level since

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<v Speaker 1>the start of two thousand eight. Tenure down five thirty

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<v Speaker 1>seconds the old one point eight five percent, Gold down

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<v Speaker 1>one point eight percent, SMP up twenty six a gain

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<v Speaker 1>of one point three percent to thirty two on Wall Street. Now,

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<v Speaker 1>I look at other news from around the world. Thank you,

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<v Speaker 1>Charlie from the Bloomberg Newsroom. I'm Vonnie Quinn. Human remains

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<v Speaker 1>may hold the answer to questions about what caused that

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<v Speaker 1>egypt air plane to crash. A senior Egyptian forensics official

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<v Speaker 1>healthy associated press body parts suggest there was an explosion

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<v Speaker 1>on board the plane. Egypt State Van News agency is

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<v Speaker 1>denying the report. However, other Egyptian officials have said they

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<v Speaker 1>believe terrorism is the most likely cause. In a speech

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<v Speaker 1>to thousands of people today in Hanoi, President Obama encouraged

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<v Speaker 1>Vietnam to strengthen its human Rights record, arguing countries prosper

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<v Speaker 1>when they embrace freedom of speech, press and assembly. Confronting

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<v Speaker 1>art imperfections and allowing everybody to have their say has

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<v Speaker 1>helped us grow stronger and more prosperous and more just.

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<v Speaker 1>A new report shows the nation seems to be kicking

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<v Speaker 1>the habit faster than ever. Bloomberg's Michael Barr has more

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<v Speaker 1>on the declining smoking rates. A new government report shows

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<v Speaker 1>smoking among adults in the US felled a fifteen percent

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<v Speaker 1>last year and involved the biggest one year decline in

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<v Speaker 1>more than twenty years. The rate felled two percentage points

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<v Speaker 1>from when about seventeen of an ould said they had

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<v Speaker 1>recently lit up. Experts believe anti smoking ad campaigns, increases

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<v Speaker 1>in the cost of a pack of cigarettes and smoking

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<v Speaker 1>band to play the role in the decline. Michael Barr

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<v Speaker 1>Bloomberg Radio, New York States Attorney general is suing Domino's Pizza,

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<v Speaker 1>alleging it underpaid workers. Eric Schneiderman says his office is

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<v Speaker 1>uncovered called rampant wage violations. The company calls that also disappointing,

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<v Speaker 1>and contends it's worked with the stage for three years

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<v Speaker 1>to help its franchises comply with New York's complex wage laws.

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<v Speaker 1>Global News twenty four hours a day, powered by our

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<v Speaker 1>twenty four journalists more than one fifty news bureaus around

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<v Speaker 1>the world. From the Bloomberg Newsroom, I'm Bonnie Quinn, Charlie,

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<v Speaker 1>and we thank you and again recapping stocks are surging,

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<v Speaker 1>with the SMP five hundred index up one point three percent,

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<v Speaker 1>gaining twenties six points to two thousand seventy four. Town

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<v Speaker 1>industrials up two oh five, a gain of one I'm

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<v Speaker 1>Charlie Peloton. That's a Bloomberg Business flash. You're listening to

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<v Speaker 1>taking stock with pin Box and Kathleen Hayes on Bloomberg Radio.

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<v Speaker 1>US commercial property values they rose by an average of

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<v Speaker 1>ten percent in twenty fifteen, and since two thousand and nine, well,

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<v Speaker 1>commercial property values have actually doubled. Here to tell us

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<v Speaker 1>more about the world of real estate and shopping centers

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<v Speaker 1>is Tom McGee. He is the president and the chief

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<v Speaker 1>executive of the International Council of Shopping Centers and he

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<v Speaker 1>joins us today from Las Vegas. Tom, thanks very much

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<v Speaker 1>for being with us. Tell us why you're in Las

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<v Speaker 1>Vegas along with almost thirty five thousand nine of your

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<v Speaker 1>favorite friends. Well, good day and thanks for thanks for

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<v Speaker 1>having me on Tim. I am in Las Vegas is

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<v Speaker 1>the site of our annual recon convention, which brings together

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<v Speaker 1>it's actually going to be close to thirty seven thousand

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<v Speaker 1>people at the at the most recent count that come

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<v Speaker 1>together fundamentally to do deals, to talk about leasing opportunities

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<v Speaker 1>and shopping centers around the country. And there's a tremendous

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<v Speaker 1>amount of energy that's taking place here. There's a lot

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<v Speaker 1>of positive feedback about the industry and vibrancy, and I

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<v Speaker 1>I think that if you took a mood in the

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<v Speaker 1>temperature of the folks that are here, that would be

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<v Speaker 1>quite optimistic. I mean, doing a deal, which is fundamentally

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<v Speaker 1>why people are here, is somewhat of an optimistic bet

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<v Speaker 1>on the future. And so we're very pleased with the

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<v Speaker 1>number of people that are here. And this has got

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<v Speaker 1>to come to a surprise to anybody who's listening to

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<v Speaker 1>Bloomberg Radio our guests talking about retail ice age for

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<v Speaker 1>for retailing right now. According to uh Burt Flickinger of

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<v Speaker 1>Strategic Resource Group, although your latest figures show that there

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<v Speaker 1>was actually an increase in UM the malls segment in

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<v Speaker 1>terms of occupancy combined super regional and regional malls in

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<v Speaker 1>the first quarter from NYOT four percent now it's up

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<v Speaker 1>to ANTY three point seven. But brick and mortar is failing.

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<v Speaker 1>That's the story, right, I'm not necessarily failing. But it's

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<v Speaker 1>online sales that are the place to be, is what

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<v Speaker 1>many are arguing when it comes to retail. Yeah, I know,

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<v Speaker 1>I know that there is a lot of certainly um

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<v Speaker 1>folks that believe that that's the case, but that actually

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<v Speaker 1>isn't the case. I mean, certainly e commerce is here

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<v Speaker 1>to stay and it's going to play an important role

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<v Speaker 1>in retail, but um brick and mortars here to day

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<v Speaker 1>as well. If physical retail is doing quite well. You know,

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<v Speaker 1>you mentioned the occupancy rates, and I think what isn't

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<v Speaker 1>being told and is the real story now is one

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<v Speaker 1>of conversions that it's not really bricks versus clicks. It's

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<v Speaker 1>really one of bricks an clicks, and consumers expect a

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<v Speaker 1>seamless shopping experience, whether they're online or in a physical

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<v Speaker 1>retail location. And still to this day, the vast majority

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<v Speaker 1>of sales in this country happen in physical retail. E

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<v Speaker 1>commerce sales are less than ten percent of the total

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<v Speaker 1>retail sales, and actually their growth as the percentage is moderating.

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<v Speaker 1>If you look at where the growth is coming, Yes,

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<v Speaker 1>some of it's coming from Amazon, but a lot of

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<v Speaker 1>it is coming from retailers that have physical locations that

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<v Speaker 1>are building out their e commerce platforms. Speaking to this

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<v Speaker 1>synergistic um synergy between e commerce and physical retail, which

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<v Speaker 1>we use the term omni channel, What if you could

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<v Speaker 1>just speak a little bit about the change that has

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<v Speaker 1>taken place at malls at a time. For example, Macy's shuttering,

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<v Speaker 1>what thirty six additional stores, seventy eight k martin Sears

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<v Speaker 1>locations also going to close, but a lot of them.

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<v Speaker 1>Malls have to spend capital in order to revamp. But

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<v Speaker 1>they're not necessarily putting in stores, They're putting in things

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<v Speaker 1>like restaurants in movie theaters. No, you're absolutely right. I

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<v Speaker 1>mean I think that what the mall owners and really

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<v Speaker 1>property owners, whether it's some malls or open air centers,

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<v Speaker 1>lifestyle centers, etcetera. They're adapting to what the needs of

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<v Speaker 1>consumers are. I mean, this is the ultimate consumer facing business,

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<v Speaker 1>and right now, consumers have a tremendous appetite for entertainment, restaurants,

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<v Speaker 1>lifestyle type of things, services and so um. As some

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<v Speaker 1>of the anchor stores may close, it represents new opportunities

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<v Speaker 1>to fill that with other offerings that you know, the

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<v Speaker 1>consumer likes and in fact, you know, I think if

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<v Speaker 1>you talk to the vast majority of landlords, they would

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<v Speaker 1>tell you that the you know that that the energy

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<v Speaker 1>that's in their properties is quite high, and that adding

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<v Speaker 1>those new locations or new service offerings is quite positive.

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<v Speaker 1>So this is a day three of RECON, the world's

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<v Speaker 1>largest retail real estate convention in Las Vegas. But what

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<v Speaker 1>are the singles coming out? What deals have been made?

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<v Speaker 1>Are there certain malls and kinds of malls that nobody

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<v Speaker 1>wants to invest in, but other ones that are hot?

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<v Speaker 1>This is what investors want to know. Now, I don't

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<v Speaker 1>I mean, I wouldn't say that there's one segment of

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<v Speaker 1>the market versus others that that I would point to

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<v Speaker 1>that is particularly doing better or worse. Shire at RECON,

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<v Speaker 1>I think that when you have thirty seven thousand people here,

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<v Speaker 1>all of those segments are doing are doing well, and

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<v Speaker 1>from the standpoint of leasing and deals getting done, I

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<v Speaker 1>would say that there's just a lot of energy here

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<v Speaker 1>and I actually this is my first RECON as president

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<v Speaker 1>CEO of by C s C. And so it is

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<v Speaker 1>pretty inspiring when you walk around the facility. We pretty

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<v Speaker 1>much take over the vast majority of Las Vegas Convention Center.

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<v Speaker 1>And when you walk around and you see the level

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<v Speaker 1>of energy and the number of meetings that are being

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<v Speaker 1>held virtually every one of the uh the locations that

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<v Speaker 1>are set up, it's pretty overwhelming. And it really, if

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<v Speaker 1>you think of retail and shopping centers, is somewhat of

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<v Speaker 1>a of a signal or a bell whether about the

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<v Speaker 1>American economy. I think it does portel somewhat of an

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<v Speaker 1>optimistic tone. Right now, Tom, does everybody there want an

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<v Speaker 1>Apple store in their more? Well? Apple? I think, what,

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<v Speaker 1>you know, it's a it's a good point. Certainly Apple

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<v Speaker 1>is a hot retailer. But I think what what Apple

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<v Speaker 1>has really demonstrated the importance of experience in the retail environment,

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<v Speaker 1>and that is I think the theme that is so

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<v Speaker 1>important to be successful in retail today, which is the

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<v Speaker 1>consumer expecting experience when they go shopping. It's not just

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<v Speaker 1>about you know, consummating a transaction and not just that

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<v Speaker 1>commodity element of shopping, but It's really about how do

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<v Speaker 1>I feel when I'm in the shopping center? What does

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<v Speaker 1>it where does it transport? Mean? To an Apple is

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<v Speaker 1>a great example of that thematic element of experience being

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<v Speaker 1>so important. By the way, Tom McGee, president CEO of

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<v Speaker 1>the International Council's Shopping Centers, joining us from Recall in

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<v Speaker 1>Las Vegas. This is Boomberg Radio. Bloombertaking Stock is brought

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<v Speaker 1>to by Audi Medalands in Secauca's New Jersey, powered by

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<v Speaker 1>Benzel Bush, offering a commitment to service, luxury and value

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