The Czech real estate fund Trigea has acquired two commercial properties in Moravia in recent days: Nákupní park Haná Olomouc and Nákupní park Ostrava. Both are located in established retail zones and have been managed by CBRE since 2013. After extending most of the leases in the properties to achieve 100% occupancy for the original owners, CBRE then brokered the sale with Trigea. Its director Tomáš Trčka says the fund is also interested in office acquisitions and is targeting a return of around 6% per year. The 19,200 sqm park in Olomouc is made up primarily of furniture retailers, but will be strengthened next year when Lidl opens a new grocery store there. Retail Park Ostrava is half the size and is leased by a mix of fashion, furniture and sports retailers.
“Retail parks were already very popular before the pandemic thanks to the numerous expansion opportunities,” says CBRE’s head of retail leasing Jan Janáček. “This trend strengthened during the pandemic and the restrictive measures and retail parks became an established part of the portfolio of retail chains.”
ThePrime: If you look at the volume of deals for retail parks for roughly the last 12 months, do you expect it will be similar in the coming 12 months?
Vítězslav Doležal (Director in Investment Properties): It was a record 12 months in terms of investment volume as well as the number of retail park transactions: CBRE records 23 deals with a total volume of over €200 million. To put this in a historical perspective, retail park transaction volumes were strong in 2018 and 2019 as well, with the average investment volume €180m, however with only 10-20 transactions. Investment demand remains still strong, however there is a lack of quality product, which is typical for a relatively small economy like ours. For example, the development of new retail parks is also limited, typically reaching 20,000 sqm – 60,000 sqm per year since 2013.
Are yields for retail parks continuing to fall in comparison with shopping centers?
Yes. Since CBRE manages one of the largest retail parks and shopping centers portfolio in the Czech Republic, we can see that retail parks have experienced a faster and more substantial recovery after lockdowns, meaning stronger footfall and sales. This was especially noticeable for sites that are anchored by a supermarket. The retail parks have been the best-performing and resilient retail format based on vacancy rates, affordability of rents, footfall and investor return potential. This has resulted in 75 – 100 bps of yield compression in Czech regions since 2019, while shopping center yields have moved in the opposite direction.
Did investors only begin noticing retail parks during the pandemic?
Investment volumes were already strong in 2018 and 2019, but you’re right to suggest that there are new core investors who have acquired retail parks for the first time. These include Generali, Patria and Trigea (CBRE have worked on two out of these three debut acquisitions).
Have retailers made the same connection? Are there some who began looking for retail park locations only in the last year or two?
Jan Janáček (Head of Advisory and Transactions – Retail): From the retailers’ point of view there is a similar positive sentiment towards retail parks as same as from investors. Retailers perceive this type of scheme as a regular part of their portfolio but still with a smaller proportion. Despite this trend the typical tenant mix in retail parks hasn’t been changed as significantly as expected. Among the most active brands that have started to occupy retail parks is the Polish brand Sinsay, which belongs to the LPP fashion chain.
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