The commercial real estate market, together with many other economic areas, after being impacted heavily by the Covid pandemic, is undergoing recovery. These positive indicators are also mirrored in the retail real estate sector. Recent figures indicate that retail parks and convenience centres, are recovering strongly as are discount shops, while large shopping centres, are reporting increasing footfall levels, optimistic economic outlook; these are the key highlights from Q3 of the year. The analysis of the retail real estate sector was prepared by experts from BNP Paribas Real Estate.
Diversity in formats increases
We have been rapidly convinced about the applicability of small format commercial facilities. We like them because they are close to residential areas, they have convenient parking and exterior entrances accessible from the parking area, moreover, we can find all the most necessary things within them and the whole shopping process is done very efficiently and comfortably. Despite the ever extending time for project completions, due in part to increasing construction costs and obstacles regarding the availability of materials and professional construction services, this year may turn out to be a record year for this kind of format in terms of new space being delivered to market.
states Natasa Mika, Director from Department of Retail Agency at BNP Paribas Real Estate
This passing quarter goes to show, that retail parks are great at dealing with the effects of the Covid pandemic. They manage a lot easier with any risks associated with potential limitations and, moreover, they fit perfectly into new shopping habits which change strengthened during pandemic. This means that convenience centres and retail parks are growing and will continue to grow further, as there are approximately 218,000 sqm of projects under construction which refer to this format only.
Rents becoming more significant
Another argument that helps tenants decide to go fo a smaller format is the significantly lower costs of fitting out the shop. In light of the significant increases in construction materials prices, as well as fit-out costs, the smaller formats seem to be a very attractive incentive, and another reason why brands that have until now developed solely on large centres are interested in switching their the presence to such locations.
stresses Fabrice Paumelle, Head of Retail Agency, BNP Paribas Real Estate