The growth of e-commerce will lead to the further scaling-up of shopping centres and retailers, according to Simon Durkin, head of research Europe at RREEF. ‘Some smaller regional shopping centres may still have compelling fundamentals, but on the whole large regional shopping centres will become more dominant at the expense of small, secondary centres,’ he said in an interview with PropertyEU.
The growth of e-commerce will lead to the further scaling-up of shopping centres and retailers, according to Simon Durkin, head of research Europe at RREEF. ‘Some smaller regional shopping centres may still have compelling fundamentals, but on the whole large regional shopping centres will become more dominant at the expense of small, secondary centres,’ he said in an interview with PropertyEU.
According to a recent report by Jones Lang LaSalle, up to 30% of retail space in developed markets is potentially redundant in its current form. ‘A sizeable amount of secondary space is not vacant - it’s obsolete,’ the adviser warns. In the same report, JLL claims that more than half of all non-food retail transactions in certain, more mature markets will be digitally influenced by 2020. A process of bifurcation is already visible in the retail sector in terms of yields and rents. While prime property values in London and Paris are set to rise further following double-digit rental growth in 2011, secondary and tertiary locations across Europe are struggling for survival.
Durkin believes e-commerce will ultimately also benefit big retailers in particular. Pioneers such as UK supermarket group Tesco and electronics giant John Lewis have already anticipated the trend and have developed highly integrated multi-channelling systems, he pointed out. ‘We’ve been talking about using mobile telephone technology to scan products and codes for years, but now it is actually happening and working. But only the big retailers will be able to afford the technical infrastructure.’
Retail investors are also scaling up their businesses. Following in the footsteps of Unibail-Rodamco, Amsterdam-listed Wereldhave is now also beefing up its retail operations at the expense of its office portfolio and concentrating on dominant shopping centres offering extension opportunities. The company aims to lift the share of retail assets in its portfolio to some 60-80%, from 54% at end-November 2011. Private equity giant Redevco is also hiving off its office and logistics assets as part of its strategic refocus on its existing retail assets.
The full article appears in the April edition of PropertyEU Magazine. Click on the link below to order your copy now
