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The Future of Fashion Retail

Insight Summit — CEEQA@Mapic, 20th November 2014

Footfall rents the future?

Online fashion an opportunity not a threat for retail landlords as footfall and dwell time become king.


Online fashion is an opportunity not a threat for shopping centres in New Europe and internationally, according to regional and international real estate leaders meeting at the CEEQA@ Mapic insight summit at the Mapic global real estate fair in Cannes this year to discuss The Future of Fashion Retail in New Europe. The advantages of additional footfall driven by m-commerce as well as click&collect and in-store returns stemming from online fashion will in the future outweigh the pitfalls of the digital revolution for retail landlords, as long as rents can be linked to footfall as well as tenant turnover in the future.

A panel of some of the sector’s most active investors, developers and consultants discussed how the challenges of capex investment in repositioning centres to leisure and entertainment destinations, combined with sales lost to online retail and a need to realign tenant expectations and relationships in the new retail environment, will pay back over time.

Income growth in many centres, the panelists agreed, will come increasingly from alternative income streams driven by impulse sales both in-store and in-centre, fuelled by ever higher numbers of online fashion retail customers being channeled back onto the shop floor by retailers wishing to curb the high operational cost of purchase returns – a trend which poses a short term revenue headache for landlords with turnover rents but which is the key to future income growth from footfall driven alternative income streams such as mobile retail, pop-up concepts and kiosks.

Leading developer GTC’s director of international retail, Mariusz Kozlowski, and TriGranit’s head of asset management, Matyas Gereben, even floated the idea of ‘footfall rents’ or ‘footflow rents’ replacing turnover rents in the future, an idea welcomed by investors Otis Spencer of Peakside Capital and Peter Todd of Resolution. However some smaller centres with a more narrow tenant mix could fail to make this new model work. Walter Woelfler, head of retail in CEE for CBRE noted that it is fashion brands that are primarily driving the omni-channel experience and while the idea of footfall rents could be a logical step into the future and the discussions inevitable, the implementation could be challenging, while Mark Barrett, a partner in EMEA cross-border retail with Cushman &Wakefield noted that most retailers are not comfortable with footfall calculations.

From the developer’s point of view, Matyas Gereben said:

“It requires a different math when we start to calculate ROIs because we’re talking about centre experience and increasing dwell time, today leisure-entertainment is averaging 8-9% [of space] in the shopping centre, in the future it will have to go up to 20-25% but leisure retailers don’t pay rent so you have to calculate where you’re going to bring back what you’ve lost on rent – the question is whether it’s going to move to footfall rents or if we’re going to change the whole math.”

But despite the investment challenges, investor as well as tenant demand for dominant retail assets remains strong across Europe, including in the New Europe markets.

New Europe Cocktail & launch of 2015 CEEQA award entries

This year’s first ever CEEQA@Mapic event also hosted a business mixer following the insight summit and announcement of the call for entries for the 2015 CEEQA Awards including the year’s award categories, jury, judging and event itinerary. Online entry forms are now available, entries close on 20th January 2015.

6L1A6406The event hosted the launch of the 2015 CEEQA award entries including announcement of the awards judging itinerary and 2015 JuryCEEQA@Mapic was organised in partnership with Mapic as the focal point for the CEE and SEE property markets at the largest annual global retail real estate fair.

The insight summit builds on CEEQA’s previous work on regional capital flows and investment trends in European and New Europe commercial real estate as well as the unparalleled market impact of its Insight Summit series over the past decade.

Both events were free access for Mapic registered delegates.


PANELISTS: Mariusz Kozlowski, Member of the Management Board, GTC; Mark Barrett, Partner, EMEA Cross Border Retail, Cushman & Wakefield; Matyas Gereben, Head of Asset Management, Trigranit Development Corporation; Otis Spencer, President, Peakside Polonia Management; Peter Todd, Partner, Resolution Property; Walter Woelfler, Head of CEE Retail, CBRE

MODERATOR: Richard Hallward, Managing Director, CEEQA.


Cee Markets:

Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia, Ukraine

See Markets:

Albania, Bosnia & Hercegovina, Bulgaria, Croatia, Kosovo, Macedonia, Montenegro, Romania, Serbia, Slovenia

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