Page 15 - Informed 2018 Issue 2

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EXPERT VIEW
European retail real estate trends: the last word
Patrick Delcol
Current negativity about the retail property sector requires a closer and more objective look at the realities. But it is always hard to fight a sentiment. In this climate, publicly listed retail real estate players are trading below their NAV.
Successful retailers – and in particular, fashion retailers – have always shown a particular ability to swiftly adapt to new consumer needs, whether that be adjusting to new environments or technologies. Most of them today have decided to place their space productivity at the top of their strategic priorities, even if that creates a slowdown in expansion plans.
Consequent closures, term renegotiations and decisions to downsize have caused headaches for their landlords. Vacancies have been rising. Still, the e-commerce boom cannot be the only scapegoat in this scenario.
In turn, institutional investors have not stopped investing into retail real estate, although they have shifted some of their focus towards retail parks, outlet centres, and high street segments, as potentially more secure investment routes – at least in their eyes. This has dragged those yields to historically low levels.
In the shopping centre segment, they are shunning smaller schemes, secondary cities or secondary products in the major cities. Not least because they have sought to leave space for the attractive logistics property sector as well.
A series of value add and opportunistic investors are accord- ingly taking a more significant position in terms of asset trades.
While the retail sector is again in the grip of a cyclical transformation, motivated as usual by a change in customers’ habits and the significant impact of new technologies, the outlook is far from bleak. All the signs suggest that retail real estate will remain the industry’s primary and most efficient distribution channel, even if we can still expect a further period of repricing and space adjustments.
Patrick Delcol
Head of Pan-European Retail, BNP Paribas Real Estate
ICSC INFORMED | NOVEMBER 2018 | 15