RETAIL PARKS AS ONE OF THE MOST RESILIENT CLASSES OF REAL ESTATE INVESTMENTS IN EUROPE

Abstract

The article covers research dedicated to retail parks, as one of the types of commercial real estate, their investment peculiarities and market trends, as well as main reasons behind their economic stability and investment attractiveness during the world pandemic of 2020-2021. The main characteristics of retail parks were examined and summarised, and they are the following: predominantly a single storey type of shopping centres; located on the outskirts of towns and cities or in the neighbourhoods with a convenient transport connections; availability of large car parks; big retail units, each with a separate entrance; indoor common areas are absent or limited; have usually lower construction and maintenance costs (compared to other real estate classes). A typical merchandise mix of retail parks was reviewed. Essentially it satisfies the basic daily customers’ needs and typically the largest tenants would be: value retailers (33%), specialized stores (16%), FMCG (14%), shoes and fashion (13%). The main advantages of retail parks for investors and owners were summarised and systematised. These advantages contribute to both investment risks mitigation and the retail parks’ management processes facilitation. Also the advantages for retail park tenants were identified: they are mainly related to location characteristics and lease terms. It was defined that during the global pandemic, retail parks performed better than shopping centres or street retail stores across the majority of key performance indicators, namely: footfall rate, vacancy rate, rent rate and return on investment. Interestingly, retail parks not only experienced a faster and more substantial recovery after COVID-19 pandemic, but also remained resilient to the threat from e-commerce. Volumes of investments into these property types increased significantly over the past years across various European countries. The investment demand for retail parks put pressure on the level of their capitalization rates, however the yields of retail parks in some European countries are higher than for other commercial real estate classes.