SPECIAL|2020 PP, A-1010 VIENNA www.across-magazine.com VN: 08Z037864M EVERYTHINGEVERYTHING ISIS UPSIDEUPSIDE DOWN HOW COVID-19 IS CHANGING THE RETAIL REAL ESTATE INDUSTRY HOW COVID-19 IS CHANGING THE REAL ESTATE INDUSTRY DEAR READER, Covid-19 remains the dominating topic in the retail real estate and placemaking industry. Even though individual European countries announced that they will gradually ease restrictions, the economic damage is already done. Everything is in flux in this industry right now. Life, however, still has to go on. More and more owners, investors, and operators of retail properties are currently looking desperately for looking restart and positioning strategies. This is certainly not an easy task. The actual impact and further development of the pandemic are not foreseeable at all. Moreover, the specter of a “second wave” causes much uncertainty among all players. Consumers are just as worried about the future and ACROSS IMAGE: this uncertainty is naturally reflected in frequencies and revenues. In short, Covid-19 will substantially change retail and the placemaking industry, at least temporarily. How these changes will actually manifest themselves, is what we asked selected representatives of the industry. Reinhard Winiwarter Publisher of ACROSS Magazine [email protected] www.across-magazine.com Facebook.com/across.magazine.europe Twitter.com/@across_magazine Linkedin.com/in/reinhardwiniwarter Xing.com/profile/Reinhard_Winiwarter 2 ACROSS SPECIAL| 2020 STRENGTHENED BUSINESS STRATEGY BY RÜDIGER DANY, IMAGE: MULTI Managing retail properties across 14 countries in Europe and Turkey, Multi has witnessed a wide range of scenarios and responses to Covid-19 by national and local govern- ments. The timing of the outbreak across Europe also meant that we had to activate our business continuity plans, protocols and pandemic plan fairly early in some regions, such as Italy, the first country to be badly affected Rüdiger Dany by the Covid-19 outbreak. Our plans are structured on a Chief Operations Officer at country level, assuring that each country was running at Multi Corporation the appropriate phase of the pandemic plan. We put togeth- er an international, cross-organisational task force to coor- dinate country responses and share best practices from across our organization. spond quickly and cooperate timely with our investors and clients in other countries. We quickly defined our approach to lockdowns and opened communication channels assur- „The reopening showcased our ing also timely communication with tenants and customers. strength as a pan-European platform, as we shared the experiences of Over the past few months, our internal cross-country com- munications and cooperation have got closer and more each country reopening, starting with intense. We see this closer and more proactive relationship Germany in mid-May, followed by all between our country operations as a clear win from this of the countries we are operating in.“ Covid-19 crisis. It gave us the opportunity to exchange experiences and come up with some valuable ideas and concepts for the reopening of our centres. For example, Multi has set up a dedicated task force of experts, includ- The fact that we operate in 14 countries could be seen as ing our in-house design studio TTDesign, to coordinate and a challenge, but we saw this as an opportunity and seized prepare for a safe reopening strategy for the retail destina- it with both hands to get head of what was coming. For tions across our portfolio. This showcased our strength as instance, the lessons learned from the lockdown in Italy a pan-European platform, as we shared the experiences of proved very useful in countries that were hit later by the each country reopening, starting with Germany in mid-May, outbreak. We learned a lot from, amongst others, the reac- followed by all of the countries we are operating in. We tions and behaviour of consumers and the questions and improved with each reopening and used the experience and concerns of tenants, owners and investors. This enabled time to prepare for the next countries to reopen. us to prepare procedures and communications for our other country operations, taking into account a range of potential scenarios. Thanks to this, we were able to re- 3 ACROSS SPECIAL| 2020 In this sense, the experiences of the past few months have strengthened our expansion policy and business strategy. Based on the experience we have gained in the pandemic, Being exposed to all the different scenarios and govern- I expect us to come up with new approaches with regards ment approaches also enabled us to advise and support to the development and the preparation of new master our clients as we were able to anticipate the risks and plans. Topics such as mixed-use, but also digitalisation, opportunities with viewpoints from 14 countries. The col- crisis management, and hygiene concepts are now moving laboration with owners, clients, institutional investors and even more into focus. other business partners has yielded good results in this challenging situation. We are very grateful for the close, Multi is proud to be part of an industry that has played an trustworthy and effective cooperation with our investors on important role meeting our communities’ daily needs in un- the one hand and tenants on the other, which has enabled precedented times. Now that restrictions in most countries us to secure the value of the assets and to support the have been relaxed or will be relaxed in the near future, we retailers, who have been severely affected by the crisis. look forward to offering our communities a safe destination to reconnect with each other, to spend time outside their At Multi, we believe that a company can only be success- homes and to have a good time. ful if its long-term strategy includes an agile approach to external factors. Our teams have been solution-oriented right from the start, developing solutions and seizing Click here for web view opportunities with a huge amount of entrepreneurial spirit. 4 ACROSS SPECIAL| 2020 THE CONSEQUENCES OF THE LOCKDOWN BY LISETTE VAN DOORN, IMAGE: ULI EUROPE It has been a very uncertain time for the retail real estate market. Prior to Covid-19, the sector was already facing structural challenges due to the growth of e-commerce and other shifts in consumer behavior, but the benign econom- ic environment kept the sense of urgency to act relatively low. However, at the same time, the general uncertainty over the future sustainability of income had resulted in an Lisette van Doorn investment market characterized by a lack of liquidity. CEO of Urban Land Institute (ULI) Europe “Now, ULI Europe’s latest report, ‘Reshaping Retail–Accelerating Change’, forecasts that the impact of These include the economic picture, the European listed Covid-19 will accelerate the sector, banks and private equity. restructuring of the retail property We believe that for any trigger to kick off the transforma- sector, even more so in the United tion process, a better understanding and clearer outlook is Kingdom.” needed related to the stability of cash flows. However, it will be hard to know, at this stage, when that clarity will exist given the ongoing unknowns such as the impacts of ULI Europe’s latest report, “Reshaping Retail–Accelerating the phased lifting of lockdowns across Europe, potential Change”, now forecasts that the impact of Covid-19 will future (partial) lockdowns, the longer-term economic out- accelerate the restructuring of the retail property sector, look and duration of government support packages. even more so in the United Kingdom. The lockdowns have already resulted in a rapid decline in operating income The investment required to meet safety expectations and for many retail real estate owners. This, coupled with the make assets fit for purpose again, strongly calls for all concerning economic outlook, will have a major effect on stakeholders to come together to collaborate on how the longer-term sustainable rents and vacancy levels and sector can succeed in the longer-term. The ULI looks subsequent valuations. forward to playing an important part in leading the conver- sation and ensuring that best practice is shared across Our research, based on recent interviews with leading the industry as the retail property sector seeks to rebuild industry players, re-examines four triggers, identified in the following the Covid-19 crisis. original report, that may break the near paralysis in the European retail real estate investment market that had been observed prior to countries entering lockdown periods. Click here for web view 5 ACROSS SPECIAL| 2020 REOPENING TO NEW POSSIBILITIES BY PETER TONSTAD, IMAGE: BOOSTCOM The last months have been extremely difficult for all of us. With one of our Boostcom teams located in mainland China, our organization was affected by Covid-19 from the begin- ning of January. Little did we know then, that we would be relating to the same challenge across all our 12 locations globally a couple of months later. As our 1,100 shopping Peter Tonstad center clients were heavily impacted from closures or CEO of Boostcom and Member of partial closures, the effects trickled down to us as a digital the ACROSS Advisory Board “It is evident that digital reach for ping centers and the highest percentage of their unique malls will be more important than annual visitors possible. On average our clients reach 30 % ever before as the world emerges of their mall visitors through their database, some reach up to 70 % of all visitors. Under normal circumstances this from Covid-19.” digital reach can drive up to 25 % of total sales for some tenants. service provider to the global industry. Most of our clients Several industry analysts said at the beginning of the put more or less all their consumer marketing activities on pandemic that Covid-19 would change retail forever.