Tuesday, March 6, 2012

Reporting from MIPIM: Surprising outlook on European retail

The Wisconsin Real Estate Program is participating in MIPIM for the seventh year running. Attending the international property conference is an important dimension to the global perspective that students gain from the program. During the week, we'll be reporting on key takeaways from the panel sessions.

The surprising outlook from the morning session "Markets, malls and main streets: Where is the future of European retail investment?" is that retail is outperforming office and industrial sectors. While panelists admitted that volatility is a factor, with retail more ups-and-downs than office, but they judged it to be less variable than industrial.

Panelists discussed three reasons to invest in this sector-- (1) diversity of cash flow, (2) limited supply due to regulations, (3) high barriers to entry due to the management intensive nature of the sector--with some caveats. Investors should target properties that have proven track records; shopping centers with 100-200 retailers are preferred over a "big box" store. While some investors fear competition from online sales or the risk of cannibalization, they could think of it as a complement to a brick and mortar shop. And for mixed use projects, a specialist in residential development can be an important partner for success.

Given the state of the economy and its fragile recovery, do you share this outlook for retail?

For all of our coverage from MIPIM, click here.

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