In its Summer European Retail Parks report, Cushman identifies the follows sector trends:
- Out of town retail needs to provide low operating costs to mitigate rise of online
The key driver of this change is the growth of online shopping, says Cushman. In the UK, online sales currently account for around 20% of the total, while in Continental Europe online sales rates are generally lower and vary according to market maturity.
Germany (c.15%) and France (c.10%) have the most mature online markets after the UK, while online sales in Sweden and the Netherlands stand at around 10% of the total.
“The expected continued growth in online sales will lead to disruption in the short to medium term, as retailers try to re-configure their distribution networks to suit the omni-channel world. Indeed, in order to get closer to customers, a number of European big box retailers are opening smaller formats in suburban locations in major cities, notably in areas with lower levels of car usage. However, out-of-town retail offers a degree of resilience by way of a low-cost option for occupiers, not to mention good accessibility for car-borne shoppers and ongoing improvements to tenant mix such as more food & beverage and leisure operators.”
- Retail parks respond to the changing requirements of retailers and consumers
Retail parks have proved to be an efficient alternative to shopping centres, notably during times of economic uncertainty and retailer sales volatility. With generally lower rents and service charges, Cushman says flexible floor layouts and increasing access to smaller cities, the retail park format is expected to remain attractive to both existing occupiers and new market entrants.
“Changing market conditions have also had an impact on retailer expansion strategies, which are increasingly focused on second and third tier cities. Retail park development is also supported by increasing consumer demand for the convenience and accessibility associated with the out-of-town market. The improvement in the design of new generation retail parks will also contribute to enhancing their appeal to retailers and customers.”
- The relative under-supply of retail parks and their ability to operate in small catchment areas indicate further growth potential for the format
In most of Western Europe, retail park markets are slowly reaching maturity, according to Cushman. Many cities now have adequate provision and some retail park stock has become obsolete. However, there have not been any significant closures so far. Most have been limited to older bulky goods schemes in secondary locations.
“New retail park space continues to be developed, although difficulties in the UK occupier market and the uncertain consumer outlook in France will reduce the pipeline going forward. In Central and Eastern Europe, the retail park market is in its relative infancy. Approximately 45% of total stock is less than 10 years old. While there has been a significant amount of development, there is still a relative under-supply of space in many areas, especially in smaller towns.”
- Focus on smaller cities and suburban areas in central and eastern Europe versus larger cities in western Europe
In Central and Eastern Europe, Cushman expects development to focus on medium, small or even sub-5,000 sq m retail parks located in smaller cities and suburban areas. Secondary and tertiary locations with a limited offer of modern retail space will also attract retail park development.
“In Western Europe, while there is a shift towards smaller schemes, larger cities with high footfall traffic, large catchment areas and good accessibility are still the main focus for developers. Retail park space is continuing to grow, as a number of small and medium-sized schemes come to fruition. Going forward, the lack of prime stock is expected to favour increased levels of refurbishment activity of secondary stock.”
- Co-location of shopping centres and retail parks
There is significant potential for the development of retail parks adjacent to existing dominant shopping centres in certain countries. In Poland, the 27,000 sq m Galeria Bursztynowa in Ostrołęka was originally opened in 2014, according to Cushman.
“In 2018, the scheme was extended and the 5,000 sq m retail park was added. Jysk, Media Markt, Decathlon, Komfort and Smyk are the main tenants in this new scheme. In Spain, Capuchinos in Salamanca was born out of the integration of a retail park and a shopping centre to enhance the existing offer. In France, a new hybrid format is also emerging which combines a retail park with a standard shopping centre, including a strong focus on architectural design.”