The retail segment was arguably one of the worst hit among real estate markets, particularly in the first part of the pandemic amid the closure of shops. Now, consumption has largely resumed - it is already above pre-crisis highs, thoug in a different structure, but for retailers, quite a lot of challenges remain. We questioned 42 retail tenants and landlords between 28 September and 12 October to see where they stand right now and what is their opinion on the near future.
For the vast majority of respondents (85%), footfall in stores has been lower in the third quarter than compared to 2019, with quite a lot reporting even more than 40% lower clients entering shops in recent months. This looks to be more or less in line with other metrics, like Google’s Community Mobility Indicators, which showed traffic in retail and recreation areas to be around at least 20% below the trend in September.
For two possible reasons that we think of, the majority of landlords do not want to commit to any major changes right now via acquisitions or sales: 1) elevated uncertainties or 2) longterm growth potential. Or possibly a combination of the two. Still, there does seem to be a view that for some, selling in 2021 might be considered like a viable alternative and there’s also a market of willing buyers, but those would rather consider opportunistic deals (not with prices at pre-crisis levels).
