The value of retail property is set to fall by 15.9% this year as shoppers increasingly move online, new research has found.
Job losses and store closures are expected to rise by 26,918 and 3,764 respectively compared with 2018 across the retail and hospitality sectors.
A total of 62% of UK property owners and investors say that ecommerce businesses, such as Amazon, are disrupting the commercial real estate industry, according to Altus Group’s annual Commercial Real Estate Innovation Report, which surveyed over 400 major property owners and investors from around the world, each with more than £200m of assets under management.
Real estate executives said this disruption is having a “profound effect” on their decision-making with 78% saying experiential retailing is impacting on investment decisions.
Stores featuring augmented and virtual reality are part of the solution, according to Professor Bamfield at the Centre for Retail Research. He said: “Shops of the future will have virtual reality at the heart of them where customers can try products in immersive 3D and share their experience with family and friends.”
Altus Group managing director Guillaume Fiastre said while the industry’s valuation of retail properties had dropped significantly because of challenges facing the retail sector, he remained upbeat: “Retail of the future will use bricks-and-mortar spaces in a very different way mixed in with leisure and lifestyle residential spaces, for example. The most successful retailers – the survivors – are learning to draw in their customers with the promise of a personalised experience. Technology makes that all possible, but it still needs a strong human element.
“The growth of online retailing, which had been seen as a difficult trend for property, is one property owners and investors can now take advantage of to drive revenue.”