Posted by: James Brown
Head of EMEA Retail Research
Jones Lang LaSalle EMEA Research
The positive mood at MAPIC really shone through many of the discussions and presentations that Jones Lang LaSalle was part of over the course of the week. We saw investor interest returning strongly, with some areas, notably Southern Europe, that have been off the radar for the last few years getting renewed attention from investors.
During the panel discussion that Jones Lang LaSalle hosted at MAPIC, it was clear that investors firmly believe that physical retail space has a bright future. Many are excited about the way that retailers are adjusting to and embracing the changes that are sweeping over the retail market. The change to a more positive mood does not, however, mean that there is any less intense focus on making the right selections, with a clear emphasis on the right space in the right location – and that applies to both mature and developing markets. What’s more, effective, active and responsive asset management has never been more important. The pace and extent of change in the retail market means that investors and owners have to be increasingly vigilant and sensitive to changes in retailer and consumer sentiment and behaviour – and, crucially, have the agility and flexibility to respond fast.
Being able to achieve that agility in the face of change will require new capabilities and talent that have not perhaps featured high on the property industry’s agenda in the past. Technology skills in particular are going to become increasingly important to ensure that retail assets are able to create the integrated virtual and physical experiences that are defining success in the 21st Century. Large, global businesses with the wherewithal to attract the right kind of talent will be at an advantage. Other players will need to be smart about using others to help them access these key technology skills. But it’s clear that not having those skills will put any developer or owner at a major disadvantage in the future.
The nimbleness and agility that are required to respond effectively to exciting technological changes are also critical qualities when it comes to entering some of the most dynamic developing markets. The opportunities for investors presented by a rapidly growing middle class with rising incomes – and an increasing propensity to spend them – are clear. What can be overlooked though are the very different risks attached to operating in developing economies. Those that are unfamiliar with the idiosyncrasies of, for example, local planning and regulation can find the road to success fairly rocky. A market can change quickly – with the recent dip in the fortunes of some of the luxury brands entering China serving a case in point. So that there are exciting opportunities for retailers and investors in emerging markets is not at issue. But those opportunities also come with sizeable risks –and it’s important that those are not forgotten in the clamour for growth.