While economic headwinds and the rising cost of living have led to a decline in consumer spending, not all sectors of retail have been impacted the same. As consumers have become more cost-conscious, they’ve been increasingly turning to discounters and value-orientated retailers.
We believe that necessity, discount and convenience-based retail is likely to prove a resilient performer in an overall fragile market. As consumers trade down, stay local and continue to require essential items such as groceries, we expect food-anchored retail parks will be a key beneficiary of these spending trends.
We also expect to see the continued evolution of the retail park concept beyond traditional retail into what we call ‘convenience real estate’. Sited on urban infill locations, these convenience real estate projects are now offering restaurants, leisure, fitness, medical practices and pharmacies, click-and-collect pick-up points, electric car charging stations, and many more consumer service needs. In addition, they also cater for mixed-use, with SME units, self-storage facilities, small offices, last-mile logistics and other complementary uses.
The synergies between retail parks and e-commerce urban logistics are also a growth area and investment opportunity. By developing urban infill sites which incorporate a retail park open to consumers at the front, backing onto an urban logistics development, this provides omnichannel retailers with a front-to-back retail and logistics operation and a step towards the so-called ‘hybrid store’.
Changes in shopping habits have, in turn, made some types of retail assets out of step with consumer demand and out of favor with modern environmental standards. Large hypermarkets and cash & carry locations are classic examples of this. For the owners of these sites, there is the risk of these assets becoming ‘stranded’ due to the lack of demand from tenants and the capex required to improve their sustainability credentials. We see this as an opportunity to create value by repurposing and retrofitting these assets to create modern, attractive and sustainable convenience real estate projects.
Axel Despriet
Axel Despriet is Managing Partner at Mitiska REIM.
