What is the Future of Retail Property?

Monday 18 January 2021

Physical retail is facing an existential crisis. Customer preferences have been shifting towards online shopping for years. Last year, in the midst of COVID lockdowns, this trend was supercharged as online retailers saw unprecedented growth.

The question then becomes, what will happen to all this retail space? Brookfield, a real estate and infrastructure manager with over $500 billion in assets under management, has released a report on what they foresee as the future of these retail spaces. Importantly, quality will matter. A lot of low quality retail spaces will become unused as shoppers preferences shift from proximity to quality. A key part of this will be co-locating retail spaces with other services people want – medical centres, day care, housing – to increase foot traffic to these areas.

The future of retail spaces will be to support omnichannel retail. More and more customers are looking to buy online and pick up in store, or browse in store and then have the product delivered to their home. In this way, the best retail spaces will be more than a space to buy a product. They will be in part advertising, part distribution centre and part customer service centre (think: how Apple use their retail spaces).

This trend of online retail is not going away post-COVID. Once customers change their habits, it is unlikely to revert back. So the best retailers and retail property managers need to find ways to adapt to these changing customer preferences, or see the value of these retail spaces fall.

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