The coronavirus crisis is having a particularly negative impact on the retail sector, but it could also accelerate much-needed change, delegates heard at Real Asset Media’s ‘COVID-19: Implications, Scenarios & Outlook for Real Estate’ briefing, the first to be held online with a panel of speakers and a live audience.
‘Retail has been hard-hit, but if the sector gets fully re-priced, then that’s an opportunity to invest in it again, accessing it a proper level,’ said Kim Politzer, Director, Head of Research, European Real Estate, Fidelity International. ‘We have been concerned about the slow progress in re-pricing retail’.
The retail sector could emerge from the coronavirus emergency in very different shape, leaner but also more attractive to investors.
‘We still have too many retailers and too many locations that shouldn’t be there and should be re-purposed,’ said Herman Kok, Head of Research, Meyer Bergman. ‘The crisis will accelerate the re-pricing and the restructuring of the retail sector’.
Another change precipitated by the forced shutdown of shops and department stores is in the relationship between landlord and tenant.
‘Tenants are struggling as their businesses are being put on hold,’ said Kevin Turpin, Regional Director of Research, CEE, Colliers International. ‘We’re encouraging communication and cooperation between landlords and occupiers, because sensible compromises are needed rather than legal routes’.
But in fraught situations like the current one cooperation can be difficult to achieve.
‘There is a conflict between opposing needs and some landlords are taking legal action against their tenants who haven’t paid the rent,’ said Tom Leahy, Director of Market Analysis, EMEA, Real Capital Analytics. ‘It would be great to have a collaborative process, but the situation is so serious that it has become a battle for survival’.
The relationship has to be salvaged for the future, because the crisis will end and things will return to normal, said Kok.
Some changes the crisis has brought about will alter the outlook for retail, for logistics and indeed for society in general over the long-term, Kok said: ‘The emergency has shown that physical presence can be replaced by an online presence. The shift to online will be permanent’.