3 February 2017 – Eje Prime
Rupert Lea, Partner and Retail Director at Cushman & Wakefield, analyses the evolution of the retail sector over the last year. “There has been an increase in high street operations, but the deals involving shopping centres have really taken the lead and are positioning themselves as a trend for the next two years”, he said, in an interview with Eje Prime.
Question: Now that 2016 is over, what assessment would you make of last year in terms of retail operations?
Answer: In terms of the volume of transactions, it was somewhat better than 2015. But now, the great trend that we are seeing are shopping centres. We have seen more operations involving shopping centres and retail parks: between 2009 and 2013, there was minimal rotation; investment volumes decreased until 2012. (…). Now, investment is growing at a rate of 50%, driven primarily by the capital markets.
Q: What will 2017 be like?
A: The retail market is a wave: it rises and it falls. Demand will continue to be constant and will have the same strength for the next two years. What sets the tone is the availability of supply, something which fluctuates a lot more in the case of shopping centres and centres that are not prime. (…).
Q: In 2017, several important operations that were closed years ago will bear fruit, for example, Uniqlo, H&M…Is the pace of operations still active?
A: Yes. We negotiate with operators from all sectors who are interested in Spain, including those who want to continue to grow brands that already operate in the country. There is still scope for more flagships to be opened in Spain in very profitable locations for operators, but they have to be experienced stores. That is another trend that is growing strongly. (…).
Q: Can we say that the sector has recovered its pre-crisis rhythm?
A: Any references to pre-crisis are complicated, because periods cannot be compared. What we can say is that some values have now reached higher figures (than pre-crisis), and some other values have not. Monetary policy and investor spirit have changed.
Q: What is the thing that interests operators the most in Spain?
A: Appropriate area of influence, robust consumption, suitable locations and suitable store sizes. The latter is the most difficult to achieve, because there are stores on prime streets that do not fulfil the requirements. Spain has a culture that involves a lot of socialising on the street and that generates a lot of opportunities for retail businesses. The success of tourism is also important for operators to take into account; millions of people visit the country each year and that is like the icing on the cake for retailers. (…).
Q: Do you think that the boom in e-commerce will put an end to the development of retail?
A: E-commerce is a complement. We see e-commerce as an ally: it was born as a challenge for high street traders, but we are seeing successful cross-market formulae. We have online operators who are looking for locations so that users on the street can observe their presence. We also have inverse cross-market formulae: customers want to return in store goods that they purchase online. This is the era of omnichannels, and e-commerce is clearly a complement. (…).
Original story: Eje Prime
Translation: Carmel Drake