Outlet centres in the spotlight
Often situated in unlikely far-flung locations that require customers to travel further outside their catchment comfort zones, outlet centres have historically avoided the spotlight. However, this is about to change as new urban outlet centres continue to emerge and prove to be one of the few bright spots in the retail sector – increasingly piquing the interest of investors, landlords and shoppers alike.
In this week’s news, Savills Investment Management (SIM) made its first acquisitions in the outlet centre market with a €300m deal for two French assets. The two outlet centres managed by @McArthurGlenUK represent a total area of 47 300 m2, including the outlet centre of Troyes which is the largest designer outlet of France. SIM sees an opportunity in this often-overlooked sector to achieve “attractive distribution” across their various ownerships. Meanwhile, some outlet centres operators are taking advantage of growing interest in the asset type by selling off parts of their portfolio– with the recent marketing of Spanish outlet managers Neinver providing further evidence of activity across the market. Local Spanish media reported that Neinver’s owners were asking for €500 million and have appointed Credit Suisse to look for potential buyers.
With #outletmallinvestments hitting records in the last quarter of 2018 at €1.7 billion, according to TH Real Estate data, their attractiveness for investors have never been more evident. Outlets have become a defensive investment and an alternative sales channel in the face of growing popularity of online retail – as well as being counter-cyclical versus main-stream retail. With lower levels of volatility compared to other real assets – as seen throughout the last economic cycle, they provide consumers with higher quality and tailored shopping experience. Operators have also begun to increasingly invest into the catering facilities to maximise dwell time, and position their marketing to suit the new, experience-oriented customer.
At the moment, experts argue that outlet centres are best placed to weather the current #retailstorm but as retail is a cyclical industry, will 2019 be the year when the tide will turn?
Priscillia MudiakiGo back to category