Retail is a bit like the story of a building that was thought to be in peril, but in the end, solid on its foundations, just needs a facelift. Sometimes a complete renovation. More rarely, a restructuring.
This renovation of physical retail first involves new mix-merchandising. Yesterday's locomotives need to be replaced by new, more powerful engines, more in tune with increasingly volatile demand. And this can only be done by specialists. Absolutely not that of institutional investors. Retail real estate remains a craftsman's trade, even if it often requires the financial resources of industrialists.
Added to this is the need to rethink formats. And the magic of retailing is that there's room for both proximity and jumbo malls. That's if you never forget the most important criterion for real estate investment: location, location, location. Because the flip side of the coin is that there's no room for the latter.
The formidable modelling clay that is commerce has enabled it to withstand, more or less, every test. From the Gilets jaunes crisis in France to the confinement during the health crisis, not forgetting the most profound: the inexorable rise of e-commerce.
To survive, retail real estate had to start its revolution in usage before any other asset class. As such, it is an R&D laboratory for the real estate industry.
Is it worth the risk for investors? You'd think so, if occupancy rates, like-for-like rents and sales growth figures reported by specialist property companies are anything to go by. The sector, having recovered before anyone else, offers a rather attractive risk/return ratio, as the coupons distributed attest.
Failing to become the martingale of the 2000s once again, retail could offer an interesting window of opportunity to investors weighed down by too many offices. Now it's time for this to materialize in the form of significant transactions.