‘In retail there are more opportunities than challenges’

Henrike Waldburg, Head of Investment Management Retail, Union Investment Real Estate

There is too much pessimism in the market on the retail sector and the negative image does not reflect the reality on the ground, Henrike Waldburg, Head of Investment Management Retail, Union Investment Real Estate, told Real Estate Day.

‘It is not a secret that retailers are going through challenging times,’ she said. ‘Thereis negative sentiment in the market but the reality hasn’t changed much. If I look at our portfolio at Union Investment, sales are slightly down but footfall went up and rents went up so the reality is that a good quality portfolio is not reflecting the negative sentiment in the market.’

Some areas seem to be performing much better than others. ‘There will be winners and losers and we have an idea of which are going to be the winning formats in retail going forward,’ Waldburg said. ‘We recently did an investor survey and it seems that many investors share our view that the outlet sector still looks pretty good, the large dominant shopping centres are still doing well and so is everything related to a very good city centre location’.

Union Investment manages a big mixed-use portfolio and is optimistic about the potential of mixed-use. ‘I find the transformation of retail very interesting and the chance to introduce hotels, offices or other new uses to former retail buildings, especially in the upper floors’, she said.  

Retailers will have to keep adapting  to far-reaching changes in consumer habits and ‘the  negative narrative we saw in 2018 is set to continue this year,’ Waldburg said. ‘There’s the reality of partially falling rents or at least rents being renegotiated by tenants who have a lot of power to do so’. 

Another negative factor is the increased capital expenditures in operating shopping centres. ‘For a long time malls have been considered as having a very favorable capex profile as you didn’t do need to do much compared to other asset classes such as offices or hotels, but that is changing and leading to negative sentiment towards the sector which is sometimes exaggerated,’ she said.

In order to keep up to speed on changes in the sector it is important for industry professionals to contantly exchange views and experiences, Waldburg said: ‘We have launched an investors’ forum at ISCS with people who represent over €600 bn AUM, €160 bn of which in the retail sector, and the sense of the discussion was that times are challenging but that there are still opportunities out there’. 

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