ICSC Whistler 2010


When I reported on the Whistler Conference last year, I noted that “…nobody knows whether optimism is warranted. Many I talked with don’t seem to disagree with the notion that after about 18 months, at most, this will largely be behind us and that 2009 will be a tough year, but not a disaster.” It looks like the cautious optimism expressed by many last year was warranted.

The 21st version of ICSC Whistler appears to have been successful. Periodic torrential rain and unseasonably warm weather interfered with the skiing somewhat (garbage bag sales were brisk) but didn’t seem to dampen a renewed buzz at the conference. Last year, what doom and gloom there was seems to have emanated largely from folks from back east. This year, the easterners seem pretty upbeat, and it’s the west that seems to be a little slower on the uptake.

This year’s registration of something like 1600 apparently surpassed last year by approximately 300. A few of the traditionally large receptions were cancelled or downsized, but it made for an even greater crush than normal at the others.

Last year, many talked about being optimistic, despite the economic onslaught. Some tell me there was lots of deal making, but a lot of it was “maintenance”, trying to hold things together until the climate improved. This year, there appears to have been a lot more deal making on the upside, new product, re-development and getting the right deal, rather than a decent band-aid.

Peter Sharp, President of The Cadillac Fairview Corporation and ICSC Chairman, in his state of the industry address, remarked that there has been a recent transformation in attitudes in the industry. Some positive sentiment is back in Canada and is creeping into the USA and other countries too. We were fortunate in Canada to have had a less challenging year than many jurisdictions. The global economic crisis hit Canada at the end of 2008, much later than elsewhere, and Canada fared quite well through it all, at least in relative terms. We appear to have emerged from the recession in Q3 of 2009, with small growth in GDP after three consecutive quarters of decline. Growth for Q4 (presumably on an annualized basis) is estimated to be about 2%. Actual figures will be available in February. The increases are soft, but definite. Consumer and business confidence is seen as re-emerging.

Peter credits the positions taken by Bank of Canada as key in supporting confidence. Maintaining interest rates at record low levels and providing assurances that the low rates would continue well into 2010 were instrumental in bolstering crucial confidence. Bank of Canada now forecasts GDP growth of approximately 3% for 2010 and slightly better for 2011. What is a little surprising is that the principal stimulus for growth in Canada in 2010 will be consumer driven, rather than export driven. Retail performance is expected to continue to build, at a slow but steady pace throughout 2010.

The decline in retail activity that many forecast at Whistler last year wasn’t as severe as expected. Consumer sentiment in BC dramatically increased sales in the latter part of 2009 such that the year likely ended about 7% higher than 2008, and only 2% below the peak in September 2008. The rest of Canada had a less violent swing in consumer demand and retail sales nationally are only down 1.4% from October ’08 to October ’09. It appears as if retail sales in BC, Alberta and Ontario suffered the most, although still fared better than the US. Newfoundland retrenched the least. Go figure. Official numbers for year on year won’t be available until February.

One factor in BC’s resurgence, which is also evident across much of the country, is a very strong rebound in home sales. Peter reported that a 64% increase in construction starts in BC from the low has given a solid boost to housing related retail and is itself a very welcome indicator of a return to better times generally.

Consumer sentiment also seems to be rebounding in the US where mall sales are rapidly catching up to Canada.

Looking forward, the three key elements in a sustained recovery for the industry are the housing market, which is strongly up, improvements in the labour market (and increases in household income) and record low interest rates. Unemployment peaked in the summer of 2009 and has been slowly and steadily improving. Disposable income year on year is up 1.6%, the lowest gain since 1996, but considering what the economy has been through, it could have been worse.

The consensus seems to be that we are in recovery mode, and that 2010 will be a better year. 2009 saw the industry working hard to manage adversity. Retailers and owners did an excellent job when consumers took a breather and ceased to be the driving force. The industry appears to have emerged better organized, operating more efficiently and perhaps even stronger.

On the social front, our annual dinner was a roaring success, as usual. Thundering rain made umbrellas mandatory for getting around. Unfortunately, there didn’t seem to be a lot of umbrellas available. Wet heads and wet coats, but lots of good cheer.

Stu Wells is the senior partner in the Commercial Real Estate Group at Clark Wilson LLP. We believe he has worked on more shopping centre developments than any lawyer in Western Canada, and has undoubtedly attended the most ICSC conferences.

– Clark Wilson LLP’s Stu Wells