From 22nd to 24th April 2009, Meridiana took the opportunity to show its presence at one of the biggest conferences for Retail Shopping Centres worldwide. The ISCS conference took place this time in Barcelona and presented some very interesting trends of the real estate and retail shopping markets. Event attendees were able to obtain new market knowledge, listen to the showcase about future markets trends or simply to network with potential contacts.

The overall feeling about the current market was not very optimistic. The financing of big retail shopping centres depends strongly on old established contacts, the right tenants and the right asset. Location, quality, securities (less risk) are the key elements to closing a deal during this time. The desired yield for retail properties in the UK in 2007 was around 17.5%. Now we are talking of 6.4% in 2008/2009, a percentage changes of 63%. In Germany, there was not that much change but figures decreased by 21% from 6.8% in 2007 to 5.4% in 2008/2009. The big opportunity is seen by the majority of the investors in the diversity of risk through a large number of tenants and in less saturated markets.

On the other hand, the majority of the speakers look to the future very optimistically. The main future trend for retail properties is the concept of sustainability and the comeback of lifestyle shopping centres in the city centres.

Concept of Sustainability

The biggest future trend will be the development of environmentally sensitive  buildings. Recycling, energy efficiency and proximity to public transportation are also some of the most important aspects for retail centres in the future.The future will bring energy problems, climate issues and the expansion of communication channels.

Therefore, the opportunity will be in the upgrade of the old shopping centres in regards to water use, waste disposal, lighting and climate control. The new links of public transportation are also of high importance. What is the big advantage? The upgrade of the old shopping centres can reduce operating costs and offer increased  tax incentives. There is also the prospect of a higher resale value at which time higher rents will be justified. Now it is possible to brand your shopping center as a new commodity because of its added value.

Lifestyle Shopping Center in prime locations (City Center)

The increase in the amount of online shopping, is very important when retailers are trying to attract and entertain its target audience. The objective is for the consumer to spend more time and money in the shopping centre. The idea is the creation of a fun interactive shopping centre concerning music, visualisation and individualisation. The company Apple stands out for their outstanding interactive digital entertainment stores. The Shopping Centres of the future are destinations to meet, they are community oriented places, social centres designed to be relaxing. Therefore, the integration of    non-retail elements is highly required, for example, Food courts, quality restaurants, cinemas, theatres, art galleries, nightclubs, and child friendly locations for the entertainment. Sport facilities, green parks, landscapes, water features, modern lighting and furniture designed for relaxation. There should be hotels, offices and apartments present to guarantee activity over evenings, during the week and on the weekend. Therefore, the new trend is to entice people to come back to the city centre, attracting users with its mixed use ability.  There is the belief that high street retailing will once again be booming. Prime examples, of this new type of Shopping Centre innovation and competence are the shopping centre in Liverpool, Liverpool One or the new shopping centre in Lisbon, Portugal. The idea is that the revitalisation of the city image: regeneration, modern centre, cultural places and public spaces to possibly attract increasing numbers of investors.

Potential Markets

Some of the most exciting markets for retail properties are located in Russia,   Germany, Spain and UK. By the end of 2009, 5,6 million m2 (vacancy less 1%) additional space are planned by the end of 2009. There are also some very interesting shopping outlets. Germany can offer 1.09 million m2 by the end of 2009 with Spain and UK both offering 1 million m2.But the main source of growth during the next 5 years will be found in the emerging     markets of India, Malaysia, Russia and the Ukraine.