This summer, Connect CRE is producing a series called “Inspiring Leaders in Our Changing Industry” as a continuation of last year’s series “Leading in Challenging Times.” We have selected leaders from across the U.S. and across the spectrum of the commercial real estate industry to discuss significant changes in the industry and their organizations. In this episode, you will hear from Tom McGeePresident and CEO of ICSC.
Taking a new course: How do you manage the transition from established ways of doing things to driving new ways within your organization?
First and foremost, the business case for changing or evolving our organization’s goals needs to be established. Do we need to respond differently to market influences? Are the industry or our members’ needs changing? Gathering input from my team and our key external stakeholders helps us better understand what needs to change and why. On this basis, we develop a strategic roadmap for the change, and communication becomes the key to success. Over-communication is not a bad thing, and the need for transparency cannot be underestimated.
A triumph to celebrate: What recent success of your organization gives you the most satisfaction? What specific challenges were overcome and what key factors led to success?
The pandemic has caused significant disruption to our industry from both a core business and talent perspective, and the importance of fostering a younger and more diverse workforce became even more apparent in 2020. This year, we launched ICSC’s Next Generation Leadership Network (NGLN) as part of an initiative to support members and CRE professionals under the age of 40. The NGLN meets regularly to discuss industry issues, network, and build its reputation within the industry and as ICSC advocates and future leaders. Initiatives like these have paid off, with our Next Generation membership growing 13 percentage points since 2021.
We also champion younger, diverse talent through the ICSC Foundation, the nonprofit, philanthropic arm of ICSC, which has awarded $2 million in academic scholarships to college students interested in pursuing careers in CRE and coordinated 700 mentoring pairings. The ICSC Foundation has partnered with Project Destined, a social impact platform that provides training in financial literacy, entrepreneurship, and real estate to underrepresented students. This partnership launched the Retail Real Estate Bridge Program in 2023, which provides undergraduate students with a hands-on, career-based learning experience. Nearly 60 students participated in the pilot program, sponsored by eight ICSC member companies.
Catalysts for change: What are the essential elements to achieve significant progress in your company and the industry as a whole?
For me, the status quo is not an option. Retail real estate is the ultimate customer-centric industry and to remain relevant, our members and our organization must evolve and keep pace with market-driven changes.
When I first joined ICSC in 2016, headlines were heralding an e-commerce takeover and the end of brick-and-mortar retail. A few years later, the “retail apocalypse” narrative dominated the press as big-name national retailers announced store closures. This was followed by claims of the complete demise of physical retail as we know it and a “sustained” shift to online shopping during the pandemic.
When it comes to physical space, demand today exceeds supply. The fundamentals of the retail real estate market are solid and numerous tenants are competing for vacant space. Through continuous innovation, the marketplace industry has successfully navigated changing market conditions to meet the needs of consumers. By offering new digital tools for networking and closing deals, changing our dues structure, and offering attractive programs to appeal to a younger, diverse talent demographic, ICSC is innovating to meet the needs of our members.
Industry inspiration: What recent advancement in the industry impresses you most and why?
As the industry changes, so do the professionals, and more and more young people of the next generation are entering the marketplace industry. This includes emerging talent eager to network with experienced professionals and learn more about the industry. In fact, we hosted nearly 500 students at ICSC LAS VEGAS this year, more than ever before, including participants in the annual ICSC & UNC Retail Real Estate Case Competition, Student Speed Networking, and a Meet the Retailers luncheon.
The attitude, confidence and drive of the students involved in our programs is truly exceptional. They are obviously tech-savvy, but they don’t hide behind their screens. Our student members come to meetings with an open mind that characterizes their generation. They are engaged, prepared and ready to ask questions and learn what it takes to succeed in the commercial real estate business.
The way to the future: Looking to the future, what key changes do you predict for the industry in the coming years? What progress do you hope to see?
Between 2008 and the end of 2023, mall gross leasable area grew much more slowly than retail sales, inflation-adjusted GDP, and the U.S. population. In fact, retail sales increased nearly 90% during that period, while mall gross leasable area grew just 6.8%. With that in mind, I expect the retail supply-demand mismatch to persist.
While sustained consumer spending, a continued focus on brick-and-mortar retail, and rising store and mall occupancy rates are encouraging signs, uncertainties remain. Geopolitical turmoil and the upcoming presidential election could potentially interrupt these positive trends and change consumer behavior and the economy. In addition, the impact of AI and other transformative technologies is at the forefront.
Consumer behavior and shopping habits are constantly evolving, requiring improvements in store design, customer service and store usage. We have seen retail spaces evolve from a place to shop, to a place where the experience counts, and more recently, to a place that is critical for order fulfillment and product delivery. The ultimate goal for retailers and center owners is to provide consumers with the flexibility to shop where, when and how they want.
Next generation leadership: As we celebrate the rising stars of the industry, what guidance can you give them to become catalysts for positive change?
Retail real estate is often viewed as a transactional business where numbers matter most. Given the dealmaking aspect of the marketplace industry, this is no surprise. But behind every deal is a relationship that made it possible. While the industry’s rising stars need to be well versed in the basics, like lease negotiations, they must also recognize the value of the soft skills needed to make meaningful connections with peers and experts in the industry. In our business, honesty and integrity come first.
Click here to view the full Inspiring leaders in our changing industry Series.
