Winter 2020

What an extraordinary year we have been through. A health crisis that has provoked volatility on a global scale never witnessed during my (not so short) lifetime. However, to quote my US retail colleagues: ‘This is not our first rodeo!’ - disruption, volatility and change have become part of the norm for us working and investing in retail, and we have had to learn to adapt and embrace those challenges that are thrown at us, unprecedented or not.

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Looking back at the past year we can clearly identify that the investor universe for retail has narrowed, and that those remaining are currently taking a “better safe than sorry” approach, with notable effect on deal execution and pricing even for the most attractive assets. The more defensive, grocery and convenience end of the market have been the retail sub-sectors of choice.

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The retail market is at an inflection point. Both landlords and retailers have had to adapt quickly, and those that do not will be left behind.  Retailers making the transition to an omni-channel model, where their online platforms compliment their physical stores, have significantly benefitted and have been more resilient to the market issues created by the pandemic, as well as other retail headwinds witnessed during the past 24 months.

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The pandemic has accelerated the rate of change we were already witnessing in the retail markets, you could argue that we have witnessed eight years of change in eight months! This is not a bad thing, retailing must continue to be innovative and experiential, convenient and sustainable and it is exciting to see how these formats are taking shape – online retailers moving into physical space, physical retailers sharing online platforms, food & beverage embracing omni channel options, flagships, pop ups and dark kitchens.

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Two Lockdowns and other free movement restrictions for many countries across Europe have made it evident that social interaction is fundamental, people need places to spend time, meet and consume. The two-dimensional world of online provides a convenient channel, however, it only partly satisfies the five-dimensional human sense. The physical retail world serves an important purpose, it will be a smaller market place but it will be more robust.

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An understanding of the specific resilience, fundamentals and characteristics that drive retail success and underpin the value of physical assets is key. The next inflection point will be the bounce back for relevant retail real estate and the accelerated repurposing of obsolete supply.

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Expertise remains paramount and our JLL teams look forward to helping our clients understand those places that are best placed to withstand the current climate and benefit within the medium to long term. Out of volatility come opportunities, we remain here to help you find them.

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Download Edition #5 or see previous editions here.