14 May, Il Sole 24 Ore
Italia Fudosan Real Estate CEO Issei Komi provides an outlook on how the retail real estate market will change in Italy and Europe after the pandemic. Hight street brands, the most prominent segment of retail real estate characterized by large stores, have been developing their online sales channels in the last few years, and Covid will only accelerate this process. A decline of mass retail is also not to be excluded, and high streets like Corso Vittorio Emanuele in Milan might see the closures of some shops, resulting in new spaces available and lower rent prices.
The luxury high street is mostly dominated by big global players such as Kering and LVMH. Rent prices are sensibly higher than those of mass market retailers. The segment is likely to be heavily impacted by the pandemic since 80% of the sales comes from foreign tourists, who will be unable to travel for the next couple of months. On the other hand, these properties are generally owned by privates, who are more likely to negotiate with the tenants to maintain a long-term relationship. Hence, there is little chance that new spaces will become available.
The third segment, named “affordable high street”, generally occupies a niche market. These shops cater to consumers focused on design and lifestyle. They are not located in main streets, such as in the case of Brera in Milan, and rent prices are highly competitive. Moreover, since these shops mostly have a loyal client base interested in a face-to-face interaction rather than online shopping, they might recoup in a short time.
Concerning foreign brands on the Italian retail market, some of them have adopted a wait-and-see approach as a response to Coronavirus, while others have continued pursuing their strategies. Many retailers need to keep a presence in a vital marketplace like Milan for their positioning and brand image.
Source: Il Sole 24 Ore
Translator: Cristina Ambrosi