Despite the uncertainty concerning the scope of the damages to the sector, the current Covid-19 crisis will bring a heavy burden to the Global economy and, in particular, to retail. Looking specifically at Europe, ULI, which has just issued the study "Reshaping Retail", shows that the segment entered the crisis already afflicted by the pressure of e-commerce’s boom and will now become even more vulnerable.
«The fact that retail is being affected by great structural changes also means it will be much more of a challenge for investors to find their place within the market», noted Lisette van Doorn, ULI Europe’s CEO. «They know that with the rents’ decreases or their repositioning for other uses, the value of their assets should be re-assessed and, that is why it is so hard to make informed decisions concerning both the existing assets and future investments. For now, the coronavirus’ impact on operational results is not yet very clear, but the pandemic will surely put additional pressure on retail assets’ owners and may trigger the restructuring», she concluded.
In order for shopping centres to be resilient in the future, it is necessary for them to find accessible and sustainable rents, revealed the study. This will be one of the tests during the restructuring process, which only the shopping centres which are dominant and firmly linked to the user’s «experience» and the proximity shopping centres, more focused on convenience commerce, will pass.
Despite all the uncertainty around this subject, it has been observed that many shopping centre owners who are having trouble, are seeking strategies to revitalise and maintain their assets’ value or, in some cases, more radical solutions like converting the building. «There is no universal solution, but different effective approaches, which should be taken into account and carried through case by case. The owners can either revitalise the assets which have stronger locations by introducing new uses for food & beverage or leisure or consider repositioning the asset», concluded Lisette van Doorn.