Retail real estate thriving in Europe, ICSC
More than 90% of 2016 retailing in the EU happened in a physical store, according to a report from the International Council of Shopping Centres (ICSC).
This found that total 2016 retail spending in the EU stood at €2.491 trillion, up from €2.544 trillion in 2015. €2.394 trillion came from store-based retail sales and the online contribution of bricks and mortar retailers. Pureplay sales accounted for just 4.4%. “Retail real estate is thriving in Europe, as it does around the world,” says Tom McGee, President and CEO at ICSC. “The industry continues to keep up with the wants and needs of the consumer and takes on a variety of shapes and sizes. It will continue to be an essential pillar of social and economic growth and commerce, and one that benefits the vitality of its local communities.”
By 2022 Millennials are expected to increase their spending on goods and services by 110% from €10,047 in 2012 per person to €21,053, the biggest increase of any age group. By 2022, this group will have also shifted the proportion of how they spend their money, with a a marginally greater proportion of their discretionary income going on things like groceries, leisure and recreation, hotels and restaurants as well as other goods and services. And relatively less on housing (30% to 25%).
McGee adds: “By 2025, Millennials are set to overtake Baby Boomers to become the largest demographic group in Europe and, as they move into their prime spending years, will be a significant consumer group and a key driver of demand for retail real estate. This generation is different than their predecessors and crave experience at their convenience, from interacting with a physical product before purchase to enjoying a meal with friends and family. Retail real estate provides that touchpoint for consumers that cannot be replicated from home or anywhere else.”
As cities continue to grow, existing bricks and mortar locations are being redeveloped and refurbished to ensure the space is properly equipped to meet the needs of today’s contemporary tenants and consumers continue to spend more of their discretionary income on recreation and services. Property owners are diversifying their tenant mix to include non-retail tenants, such as food and beverage operators, fitness and spa amenities and a wide range of educational, cultural and entertainment facilities.