The retail sector has been undergoing structural change for many years and the COVID-19 pandemic has further exacerbated the situation for many retailers. It is little wonder, therefore, that retail associations are sounding the alarm and predicting the end of the city centre. While the transformation process undoubtedly is and will remain painful, however, it also offers long-term opportunities for our cities. These prospects are also likely to benefit property owners.

• Prime rents on shopping streets are falling. This is making rents on space for price-sensitive concepts such as supermarkets or furniture stores more attractive. Other potential occupiers include innovative concepts, such as experience stores, or even users from other sectors, such as flexible workspaces. Pure online retailers that could previously not afford retail rents, or were not prepared to pay them, are now also more likely to open brick-and-mortar stores. In doing so, these new occupiers will not only benefit from more favourable rents but also from the increasing flexibility in lease structures, such as shorter lease terms or turnover rents. Ultimately, this may result in more diverse and hence more attractive shopping destinations, which in turn is likely to have a positive impact on the remaining traditional retailers.
• Insofar as mobile working becomes an established trend, and we assume that it will (see also: Yesterday, at the office. Today, at home. And tomorrow?), demand for restaurants and local supplies will increase, providing an attractive option for converting space particularly in urban district locations. Satellite offices near residential locations may also find a home in retail units.
• Hence, the current period of upheaval offers investors with a greater appetite for risk a variety of investment opportunities. The repositioning of city-centre properties that previously attracted high footfall, such as department stores, are one example. With prime yields softening significantly, shopping centres also offer potential for value-add strategies and even greater prospects for redevelopment (see also: Where is the shopping centre market heading?). Investors that seize the opportunity early may well end up the proud owners of properties with a diverse tenant mix in more vibrant city-centre locations. As this transformation process concludes, more risk-averse investors will also enter the stage, presenting opportunities for profitable disposals.