Repositioning of retail space has become a must, delegates heard at Real Asset Media’s European Outlook: Retail Investment Briefing, which was held online recently.
‘There is a massive restructuring going on in the market and landlords have to add value, unlocking the potential of each building by maximising its use,’ said Herman Kok, Head of Research, Meyer Bergman. ‘It’s becoming ever more urgent.’
In inner cities now there is an opportunity to transform stores, especially department stores, into offices, residential, hotels or mixed-use.
‘We like retail and retail real estate but now the amount of retail in a building must be reduced and integrated with other functions,’ he said. ‘There are difficulties with urban planning because some city authorities still have to get used to the fact that retail supply will have to reduce and that the role of that building in the urban fabric will have to change.’
Adaptability and flexibility are key for all stakeholders involved, but the starting point has to be the realisation that the sector is undergoing a radical transformation and that people’s habits have changed.
‘Things are changing and the fact is that people don’t want to shop in a six-storey department store anymore,’ said Rowan Verwoerd, Portfolio Director Germany, Redevco. ‘Fashion retail on the ground floor can still make a good turnover, but there needs to be a change of use for the upper floors. We try to re-purpose that floor space into hotels, F&B, residential, maybe a supermarket in the basement.’
In a snap poll done by Real Asset Media, nearly half of respondents (48%) said they believe that food-led retail will perform the best, well ahead of urban mixed-use, high street retail and out of town retail. Urban shopping centres came last with only 4% of respondents expressing a belief in their future.
More lateral thinking is needed to bridge the sector across these difficult times.
‘I would love to see more innovation, more pop-ups in a more structured and coordinated form and also more independent stores,’ said Chris Igwe, President, Igwe International. ‘Retail is an extremely resilient sector with some of the brightest minds in the business. What we need most in our industry are visionary leaders to point the way forward.’
In the medium to long term the sector will recover and find its place again.
‘Shopping malls are suffering now, but I believe that good retail will come back,’ said Rowan.
‘History shows us that cities always recover from pandemics, and this will be no exception,’ said Kok.
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