Retail repurposing - is 2020 the year of opportunity for mixed use developers?
The current Covid-19 crisis has accelerated the rise of e-commerce and the decline of traditional retail, especially on our high streets.
Globally there is a surplus of retail space. Some of this will be ripe for mixed use development which will create social value and footfall.
According to Savills, 2020 is likely to be the year we see retail pricing bottom out. It may therefore be a good time for investors and mixed use developers to take opportunities as they present themselves particularly towards the back end of the year when there is likely to be more distressed assets.
Developers and investors in the US are currently grappling with the same issues and there are some notable successful examples of this, as Mark Garmon-Jones, Head of Shopping Centre Investment and Repurposing at Savills, notes: 'GGP, the second largest mall owner in the US (bought by Brookfield in 2018) has a track record of redeveloping struggling retail malls into mixed-use town centres'. It may therefore be a good time to start looking across the pond to learn any lessons.
Although this approach can be at odds with the notion of single property asset classes, the most exciting developments appear from those landlords who are most willing to adapt their financial and asset models to mixed-use, while embracing long-term sustainable development, which can reap financial rewards too.
