2025 set to be ‘watershed year’ for retail property Future demand for space will come from new retailers or online giants
Bucharest, November 22, 2018 – Colliers International is predicting it will be a further seven years before there is a rebalancing of the physical and online retailing sectors across Europe.
Colliers Co-Head of EMEA Retail, Etienne van Unen, comments: “We are seeing a significant slow-down in e-commerce growth and we believe that the market-share achieved by online retailing in the UK – which is about 27% – is not going to be repeated elsewhere in Europe. For all European sub-regions, we expect 2025 to be a watershed year as e-commerce spending reaches a point of maturity across these territories.”
Colliers specialists estimate that future demand for retail space will either come from new retailers or the online giants – neither of which have the 20th-century ‘legacy’ problems of huge store networks and the crippling costs that these can entail.
E-commerce will also evolve in the coming years and have a closer relationship with ‘in real life’ shopping. Amazon’s offer is fundamentally shifting from its roots as an online retailer towards being a third-party provider of tech, fulfilment and physical stores in which it will curate a wide and responsive range of brands and products.
van Unen observes: “Amazon is set to reinvent the concept of supermarkets and department stores for the 21st-century and in doing so will become one of the world’s largest occupiers of retailing space”.
While these transformations take place, real wage growth is forecast to help drive discretionary retail spending by around 3.9% per annum across Europe during the next five years. However, this is not going to provide much respite for beleaguered ‘in real life’ retail property landlords.
Colliers Co-Head of EMEA Retail, Paul Souber, comments: “This wage growth and increase in spending will not on its own ride to the rescue of the physical retailing sector as it is unlikely to translate into any real uplift in demand for space. The retail property sector cannot sit around and simply wait for online growth to diminish and for the big internet brands to start opening more stores. Drastic action is needed. Redundant retail space must be eradicated through demolition or being repurposed into residential and other alternative uses”.
Colliers International Group Inc. (NASDAQ: CIGI) (TSX: CIGI) is a top tier global real estate services and investment management company operating in 69 countries with a workforce of more than 13,000 professionals. Colliers is the fastest-growing publicly listed global real estate services and investment management company, with 2017 corporate revenues of $2.3 billion ($2.7 billion including affiliates). With an enterprising culture and significant employee ownership and control, Colliers professionals provide a full range of services to real estate occupiers, owners and investors worldwide, and through its investment management services platform, has more than $25 billion of assets under management from the world’s most respected institutional real estate investors.
Colliers professionals think differently, share great ideas and offer thoughtful and innovative advice to accelerate the success of its clients. Colliers has been ranked among the top 100 global outsourcing firms by the International Association of Outsourcing Professionals for 13 consecutive years, more than any other real estate services firm. Colliers is ranked the number one property manager in the world by Commercial Property Executive for two years in a row.
Colliers is led by an experienced leadership team with significant equity ownership and a proven record of delivering more than 20% annualized returns for shareholders, over more than 20 years.