Property companies will need to pay close attention to the impact of technology on the office and retail property sectors.
Delegates at the annual conference of the European Public Real Estate Association (EPRA) in Paris heard how the two sectors were facing respective upheaval from new working and consumer habits.
In the retail sector, landlords needs to adapt quickly to changing shopping habits, Sandrine Devillard Hoellinger, senior partner at McKinsey in Paris, told delegates.
“The [real estate] industry could be a bit faster,” she said. “Major trends in the next 15 years will see falls in revenues.”
She said technology and structural industry shifts would shake up the retail sector, with the mall model in need of close attention.
“Consumers will continue to seek physical experiences for the next 15 years at least,” Devillard Hoellinger said.
“Malls are not dead, but investors should build the malls of the future now.”
She said malls would need to be “brands themselves” and adapt to tenants’ needs as they, in turn, adapted to those of consumers.
Devillard Hoellinger also argued that the role of online retail, or e-commerce, had raised the question of how to monetise footfall.
“It’s a people and talent – not capital – intensive business,” she said.
Unibail-Rodamco chief executive Christophe Cuvillier cited the French cinema industry as an example of how the retail sector should face the challenge of online shopping.
“Online retail growth is not exponential,” he said.
“In spite of Netflix and 150 channels to choose from, we maintained the cinema industry in France, and, thanks to this, our cinemas are full. We need to recreate that in retail.”
Multi Corporation chief executive Jaap Blokhuis highlighted the importance of interaction and the leisure experience.
“Opening times have changed,” he said. “Retailers are forced to provide internet services and to be open seven days a week.”
Jeremy Lewis, chief executive of Eurocommercial Properties, said that, with only 8% of UK retail sales being online, he did not expect exponential growth.
“The internet has been around for 10 years, and yes, it’s a factor,” Lewis said. “But I’m not convinced people are making a lot of profit out of online (retailing).”
In the office sector, Land Securities chief executive Rob Noel said that, despite a preference among tenants for shorter leases, some office occupiers were seeking hubs for up to 20 years and requesting “bespoke” assets when committing to longer-term leases.
Co-panellist Philippe Depoux, chief executive at Gecina, said it was very hard for any business in such a “disruptive world”.
“We need to anticipate what tenants want,” he said.