Out of town retail market is thriving – The Out of town retail market is reaching new heights nowadays. Let’s talk numbers. Last year, investors spent €300 million in out-of-town retail, or 20% of the total amount of investments in retail real estate in 2018. Furthermore, we closed the year at a take-up of 225,000 m², which makes up 52% of the total take-up in 2018. That share has remained stable in recent years. Out-of-town retail is a very stable segment that is not susceptible to determining factors. OOTR stores are characterized by easier access, more ample floor space and cheaper rents. All these advantages attract both customers and retailers. Just think of Lidl, Jumbo, Albert Heijn, ACTION, ZEB and JYSK.
Real estate investors shying away from risky investments, more often look at out of town stores as a reliable investment, because they guarantee stable rents and returns. In addition, Out of town retail seems to be ready for the various challenges that the retail sector is confronted with at home and abroad – just think of the exponential increase in online retail and a shift in socio-demographic patterns.
A rumor that often makes the rounds is that Out of town stores are a threat to city centers. But according to us, city centers should not fear a loss of revenue. Both segments are actually very diverse. First and foremost, the two segments attract different types of customers: An Out of town customer is completely different from a city customer. A couple with young children who live further from the city for example, will choose for Out of town retail instead of high streets, because they want to shop quickly and efficiently.
There are also essential differences in terms of the offer. Furniture, DIY, cash&carry and other such businesses are often situated in main road stores because of the extensive available space and the necessary parking facilities. Furthermore, retailers are no longer focusing on a single segment. In other words, the segments are complementary.
The fact that investors are less eager to embark on risky investments creates a hybrid market situation where investors no longer limit themselves to one segment but are present in each segment. We see investors moving from city centers to main road stores, for one. That trend is not a threat for the former group, however, because we also see that there are investors who are taking this step from the outskirts to the city centers..
Moreover, it is also clear that consumers are changing too. People no longer only shop locally. They dare to go in town and are looking for an experience. When it comes to young families, reachability and accessibility become priority. They are turning to Out of town stores for the convenience, but city centers for the experience.
We also see that Out of town stores and e-commerce increasingly go hand in hand. For instance, Out of town stores are the perfect place for collecting online purchases. That is an ever so profitable route for investors. Have your parcel picked up in your main road shop, and you have a win-win situation. You can reach your customers easier and your costumers have direct contact with your shop. In the best of cases, they will even make an extra purchase.
Clustering is another striking trend in out of town retail. If you take a good look around, you often see that certain stores are next to each other. They are ‘good neighbours’ in other words. Take Torfs, Zeb and JBC for instance. These three chains strengthen each other and attract the same target clientele. By clustering togheter they reinforce their location, attraction power and revenue!
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