If it wasn’t apparent that the repercussions of the pandemic coupled with the rise of e-commerce was going to change the retail landscape, it is now with the International Council of Shopping Centers announcing it will rebrand to better align with the changing times.
The global trade association stated that its acronym will now stand for ‘Innovating Commerce Serving Communities’ which better describes, or acknowledges, the impact that the physical property has on communities.
“The terminology ‘shopping centers’ or ‘retail real estate’ are still clearly an important part of our membership,” ICSC President and CEO Tom McGee said in an interview. “But they’re somewhat descriptive to the historical nature of who our membership was, from a demographic standpoint … the property type that it was. As opposed to the impact that the industry has upon communities.”ICSC President & CEO
This new lens that McGee is referring to has stemmed from the sudden over-supply of retail space in a world that hasn’t the demand for it anymore because e-commerce was so easily adopted with stay-at-home and COVID. The rise of e-commerce take over was inevitably going to happen as technology naturally expands possibilities, but the pandemic accelerated its evolution giving smaller retailers everlasting headaches—In general, centers with big-box tenants who were deemed essential have done well.
According to Moody’s Analytics REIS, vacancy rates for all retail real estate space in the nation has jumped to 10.6% in Q1 2021 for the first time since 2013. Furthermore, this equates to about 3.6 million square feet of retail space returning to the market in 2020, and 800-thousand square feet in Q1 this year—while vacancy rates for just U.S. malls struck 11.4% in Q1.
Malls and retail space are headed for an entirely new direction as ‘experiential retail,’ is being entertained by mall operators already. And then it makes sense why McGee and the ICSC are expanding membership to include other businesses such as tech start-ups, or real estate services providers.
“This is not just a rebranding,” he said. “To me, it’s reflective of what’s happening in the industry as a whole, and within our membership. And we’re evolving with the industry.”