Page 11 - Informed 2018 Issue 2

valued benefits of non-retail tenants
were revealed to be increasing visits and time spent at shopping centres, as well as improving vacancy rates, which was seen as a valued benefit in APAC and the U.S. in particular.
Future places – live, work and play
‘Placemaking’ – creating an environment where people want to visit and return
to – has become an industry buzzword However, if shopping centres are to broaden their appeal as consumer destina- tions and not just shopping locations, they must indeed become fully multi-functional venues with a wide range of occupiers and uses – places where individuals from all
walks of life can come together to shop, dine, socialise, learn, teach, volunteer, be entertained and much, much more.
Beyond simply enhancing the tenant mix, though, many retail real estate develop- ers are creating fully mixed-use prop- erties where people can live, work and play. These projects often include one or more of the following elements: offices/ co-working space, hospitality, residential and common space. The resulting synergy represents an important opportunity for a collection of tenants and uses that thrive from their collaborative success.
Sarah Cole, Manager of International Research, ICSC
Figure 1|Average Share of Shopping Centre GLA by Tenant Type
Figure 1|Average Share of Shopping Centre GLA by Tenant Type
90% V Retail Tenants 90%
V Food & Beverage
V Other Services
80%
80%
70%
70%
60%
60%
50%
50%
40%
40%
30%
30%
20%
20%
10%
10%
0%
0%
current
in 10 years
current
in 10 years
current
in 10 years
current
in 10 years
current
in 10 years
V Retail Tenants V Food & Beverage V Other Services
c
urre
nt
Canada
Europe
Asia-Pacific
U.S.
Global
Canada
Europe
Asia-Pacific
U.S.
Global
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V Supporting rental income
V Supporting rental income
V Supporting overall retail sales
V Increasing the number of visits to a shopping centre
V Increasing the number of visits to a shopping centre V Improving vacancy rates
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Figure 2|Non-Retail Tenant Benefits for Shopping Centres (1 to 5.5 being most beneficial) Figure 2|Non-Retail Tenant Benefits for Shopping Centres (1 to 5.5 being most beneficial)
4.5
4.5
4.0
4.0
3.5
3.5
3.0
3.0
2.5
2.5
2.0
2.0
1.5
1.5
1.0
1.0
0.5
0.5
0.0
0.0 Canada
V Supporting overall retail sales V Improving vacancy rat V Increasing time spent at a shopping centre
V Increasing time spent at a shopping centre
Europe
Asia-Pacific U.S.
Global
Canada Europe Asia-Pacific U.S. Global
es
EXPERT VIEW
Retail risks create location opportunities
Simon Wallace
Retail is changing. Isn’t it always? Since the opening of the first department store 200 years ago retailers and land- lords have been adapting their models. There are always winners and losers, but through a process of trial and error and creative destruction, the sector finds its new equilibrium.
We wholly subscribe to the view that retail will and indeed must once again change, and this change includes giving over more space to non-retail tenants.
We see today across our own portfo-
lio that those centres already offering the full package of shopping, dining, services and leisure are not just proving resilient against online, but are thriving as consumer destinations.
However, we need to be honest. Change comes with a cost. Successful retail locations will require intensive asset management. Leases will likely shorten and churn increase. Local and innova- tive often means accepting tenants with weaker covenants.
These costs will need to be factored into the value of retail assets. However, given the recent relative underperformance
of the sector, this may well already be taking place, and in time will almost cer- tainly create investment opportunities.
Simon Wallace
Head of Research, Alternatives, Europe, DWS
ICSC INFORMED | NOVEMBER 2018 | 11
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