Not so long ago the retail park seemed like the shopping format that the future left behind. Too far from anywhere, too reliant on the car, and with only a few stores on site, many too limited to feel much like a shopping destination. But the pandemic changed most things, and retail parks are no exception.

Lockdowns across Europe have generated new hobbies and leisure pursuits. DIY, gardening and home gyms have underpinned sales for typical retail park occupiers. Thus footfall and sales declined less severely at retail parks during the pandemic than they did at shopping centres and high street shops. Investors looking for retail are highly focussed on formats driven by value, convenience and frequent visits, and which have capacity to service e commerce functions.

Their position in open-air, large scale formats that are easily accessible by car has now flipped from a negative to a positive. It looks as though retail park assets have a firm place in the sector’s future.

OUTLOOK

• Demand for value goods is expected to continue, with inflationary pressures causing uncertainty around the future strength of disposable incomes. Retail park offer is expected to remain attractive for consumers, especially convenience driven schemes with foods-tore anchor.
• Many consumers are expected to continue investing in their homes, through furniture and DIY sales, especially in cities with growing populations (German cities, Dutch cities, Copenhagen, Dublin, Warsaw) and rising disposable incomes (Copenhagen, Warsaw).
• The growth of click and collect is predicted to expand strongly over the coming years (Global Data), becoming a key growth area for many retail operators. Retail parks are well placed to capture large part of this trend and to benefit from the in-store sales generated.
• The propensity of retail operators to recognize retail warehousing as a solution to their ‘last mile’ customer fulfilment requirements is becoming increasingly common and will undoubtedly gain more traction in the coming months and years. It is why we have begun to see much more interest from investors, many exploring the sector for the first time.
• We expect higher supply of value add opportunities in the market, especially in Western European markets where older stock is in need of redevelopment. Product may also come on to the market from owners that are looking to reduce their exposure to retail.
• Strong recovery in consumer spending may support some optimism for retailer performance and covenants in some locations and resilient assets. This may lead to further polarisation between prime and secondary pricing.

_{Read the articles within Spotlight: European Retail Parks below.}