Global Shopping Centre Yield Benchmark Survey

Global Shopping Centre Yield Benchmark Survey

Graham Hughes

Graham Hughes

Executive Director

+44 20 7182 2631
graham.hughes@cbre.com 

Daniel Hayden

Daniel Hayden

Director

+44 20 7182 2345
daniel.hayden@cbre.com


GLOBAL SHOPPING CENTRE YIELD BENCHMARKING SURVEY

CBRE International Valuation is pleased to present our fifth Global Shopping Centre Benchmarking Survey (GSCYB).

The comprehensive document spanning 160 pages is available on request, please find a summary of the key findings below.

With some USD 160 billion invested globally into retail real estate in 2016, now more than ever it is essential for sophisticated investors to establish a deep understanding of the relativities between returns delivered across major markets.

The extent to which yields are influenced by economic, property and risk factors as well as the relative impact of each in any individual market is important; particularly for investors who seek to understand where opportunities may lie.

The need to identify opportunities, in a crowded investment universe full of mixed signals, therefore renders robust cross-border comparison an essential tool of analysis.

THE SURVEY

Covering the entire spectrum of global real estate markets, investigating 61 locations to determine the common drivers that materially influence shopping centre yields and aiding the formation of opinions on opportunities based on their economic, property and risk structure.

 

KEY FINDINGS

  • Economic and political risk is a key factor in every instance, but accurate measurement and application of the components is critical, as weightings can differ vastly between core and emerging markets.
  • Factors such as geographic proximity, market liquidity and transactional volumes are seen to bring a level of transparency and de-risking that is typically not sufficiently reflected in country risk profiling.
  • GDP growth is fundamental in modelling investment destinations, although superior alternatives are identified as providing more accurately correlated growth inputs for certain types of markets.
  • Funding availability is a key driver of yields, although the availability and use of debt typically has more pronounced influence in the core markets than the emerging.
  • There is a growing group of countries where market performance and fundamental drivers do not both align clearly to either core or emerging markets, indicating the existence of a middle ground of “emerged but not yet core”.

 

2016 Global Shopping Centre Yield Benchmarking Survey Request

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International Valuation focus on… Retail

International Valuation focus on… Retail

Graham Hughes

Graham Hughes

Executive Director

Daniel Hayden

Daniel Hayden

Director


The year so far

Daniel Hayden and Graham Hughes of CBRE’s International Valuation team provide a ‘Valuation View’ of the sector’s prospects as we move into the second half of 2016. The report includes:

• The year so far including an overview of current trends in retail property

• Key European deals of the year, as CBRE tracks and analyses retail transactions throughout Europe

• Outlook – 2016 and beyond

 

 


Find out more

Click here
Just launched: In_Retail

Just launched: In_Retail

Jonathan Adams

Jonathan Adams

Senior Director

From innovative and exciting pop-up shops to capturing the attention of Chinese tourists in traditional shopping hotspots, this issue of IN_retail analyses how to maximise the potential of a multitude of landscapes. We explore;

 

  • The second largest economy in the world is slowing down and some global brands are already scaling back their expansion plans. So, is this the end for retailers’ ambitions in China? Far from it say Bryn Davies and Rebeca Guzman;
  • Within the next two years, it is predicted that Chinese shoppers will be the West End’s biggest customers – and New West End Company is taking advantage of the continuing boom, Jace Tyrrell reports;
  • In an age where choice is such a prevalent concept, retailers are coming up with new ways to encourage brand loyalty. And the “community first” approach is producing admirable results;
  • Finally, we have developed a powerful new benchmarking tool that will help retail property investors and retailers with global ambitions decide which gateway cities to target next – read more inside.

Find out more

Download In_Retail
How is Logistics responding to changing consumer behaviour?

How is Logistics responding to changing consumer behaviour?

Judy Zhu

Judy Zhu

Analyst

Jack Gallagher

Jack Gallagher

Graduate Surveyor

What’s the story?

We are all familiar with the dramatic change that has been taking place over the past decade, in respect of consumer shopping behaviour. In today’s omnipresent world, the consumer has the option to shop on the go via their smartphone, tablet and even on their smartwatch. The whole process has become ‘frictionless’.

Retailers have naturally had to adapt to cater for these fast-changing shopper habits and in doing so have had to dramatically rethink their retail distribution networks. No longer is it enough for retailers to have one line of goods delivery – from warehouse to shop. Now they must cater for the home delivery market, the Click and Collect market and of course those that wish to return goods in store or from the comfort of their own home. The timely delivery of goods is also high on the list of priorities for shoppers, they don’t want to wait the prerequisite 2-3 business days for their products, they want them now!

In response, many retailers have embarked upon an aggressive process of national distribution expansion, with demand for services provided by third party logistics firms rising significantly in the process. To put this expansion into context, when combining take-up of logistics space for both high street and online retailers, it has more than doubled over the last four years and now comprises over 40% of the logistics market. The question is – how much of this increased demand for distribution space has come about as a result of new-age delivery channels and how much stems from traditional warehouse to shop stock deliveries?

To answer this question, we consider the pace of Argos’ year on year growth and revenue generation, stemming from 3 distinct sales channels; Click and Collect, Home Delivery and In-store Purchase.

 

Argos Distribution Chain & High Street Store Lay-Out

What does the data say?

The data shown below demonstrates that multi-channel distribution is going from strength to strength.

Argos Multi-Chanel Sale (% of total sales)

Source: Home Retail Group Annual Report and Financial Statements 2015
(outstanding % accounted for by in-store sales)

The watershed moment (for Argos’ business) took place between 2012 & 2013, when Click and Collect and Home Delivery orders began to account for a higher percentage of overall sales than In-store Purchases.  There is also a clear sign that the majority of customers favoured the Click and Collect method of product receipt over that of Home Delivery, by a ratio of roughly 9:5 in 2015.

Furthermore, when considering growth rates in popularity between Click & Collect and Home Delivery, it appears (as shown below) that the former is far outstripping the latter.

Argos multi-channel sales annual growth

Source: Home Retail Group Annual Report and Financial Statements 2015

With an average year-on-year growth rate since 2011 of roughly 0.4%, Home Delivery on a pound for pound sales basis is both dwarfed and unlikely to catch up with growth in the Click and Collect market (which is averaging a rate of 5.9% per annum).

An increased reliance on internet purchases in favour of orders made over the phone, is yet another key trend that lies behind the data shown above. Telephone ordering has seen a significant rate of negative growth, averaging circa -17% per annum over the past four years. However, online orders registered over the same time period (which already constitute the vast majority of multi-channel purchases), have seen an average growth rate of circa 6.4% per annum (N.B. including in-store orders for Home Delivery).

 

What does it mean for the distribution/warehouse sector?

The story of Argos’s growth in multi-channel distribution sales, is yet another example of how changing consumer behaviour towards remote selection, is fast becoming the dominant means of product purchase. Compounded by rising consumer spend, the rapid growth of the Home Delivery and Click and Collect market means retailers are obliged to expand their distribution capabilities and space, or risk missing out on potential future sales.

One point of interest highlighted in the data shown, is how the consumer generally favours the Click and Collect option of product receipt a lot more than that of Home Delivery. A major driver of this trend lies in the convenience element of consumers being able to pick up their order at a time and place convenient to them, rather than selecting a predefined time frame during which they have to be at home to take receipt of their product.

Furthermore, a key consideration for retailers is how to cater for the last mile stage of product delivery, in the shortest time frame possible. Argos as a case study is particularly well equipped, given their unique store design, to handle quick product turnaround from selection to customer receipt. As a retailer that devotes a significant amount of shop space to storage, Argos are able to use vans to carry out same-day stock deliveries direct from store to the consumer, thereby by-passing any lengthy delivery routes from distant regional warehouses. Other retailers that have opted for a more conventional shop model will either need to adapt their high-street layout, increase their distribution footprint adjacent to major consumer markets, or simply increase their efficiency/spend on last mile methods of delivery in order to successfully compete.

Ultimately, the overriding focus for retailers in their quest to cater for rapidly changing shopper habits, should be to maintain a reactive, yet well founded distribution base that can accommodate peaks and troughs in consumer demand.

“A flexible and efficient supply chain is crucial to modern operations. We expect retailers who can provide a quick, seamless service from point of customer payment to product delivery to see a continued increase in multi-channel sales.”

– Ben Thomas (Director, CBRE Valuation – Distribution & Logistics)

To find out more about our specialist Logistics Valuation Service, contact Ben Thomas, Director or Jonathan Compton, Director.