Changing face of retail will have catastrophic impact on lease terms

The evolution of shopping centers will result in a new era of fluid blended use retail spaces, leading to a catastrophic drop in the length of tenant leases.

The warning comes from Grazyna Wiejak-Roy, a senior lecturer in urban economics and real estate at the University of the West of England, who says that investors must begin to future-proof their retail allocations.

Speaking at the MSCI/IPF conference in Brighton, U.K., Wiejak-Roy has predicted the retail experience of the future will revolve around socializing and providing people with the psychological benefit of human contact that they will gradually lose due to online services disrupting every facet of their lives. She argues that social interaction will be a vital factor in how shopping centers are redeveloped, resulting in a far more fluid and blended use of retail space than at present. This may involve the growth of far more pop-up concepts than at present.

“We will see a lot more blended use in the future,” she says.

“The concept of having a bank or a separate café in a shopping center may even become redundant as mixed use blurs the lines between different services and operators. We will see very fluid changes in terms of multiple users and these will take place at the same time. We may not even be able to use the term ‘tenant’ anymore.

“As a space being used for something today may be used for something entirely different tomorrow, this will have catastrophic effects on leases.”

Wiejak-Roy says that this will eventually lead to the real estate sector struggling to accurately define retail as a sector.

She adds that the sectors of the future that will have to replace traditional retail will inevitably be in the residential space, in particular student, temporary and elderly care living.