There are estimated to be more than 5,000 institutional-grade retail parks across Europe, representing an investible universe approaching €100 billion. By any measure, this is a significant real estate sector. Yet one of the most interesting conclusions from research I recently conducted into the sector is that the term European retail park may not be nearly as useful as investors assume.

When investors talk about European retail parks, there is an understandable tendency to think of them as a single asset class. The label is convenient. It groups together thousands of assets spread across multiple countries and markets under one recognisable category.

The difficulty is that, on closer inspection, the similarities between retail parks are often less important than the differences.

Our research, backed by Redevco’s longstanding asset management experience, suggests that retail parks are best understood not as a uniform format, but as a collection of assets shaped by different planning regimes, demographic trends, urban environments, tenant structures and ownership histories. What appears to be a single market from a distance quickly becomes far more granular when examined at asset and tenant level.

One of the observations that may surprise those unfamiliar with the emergence of the asset class is just how influential planning policy has been in shaping the sector, particularly during the 1970s-90s.

Most investors naturally associate retail parks with broader forces such as suburbanisation, rising car ownership and changing consumer behaviour. All have played a role. Yet the evidence suggests that planning regimes have often been equally important in determining where retail parks emerged, how quickly they expanded and what form they ultimately took.

This helps explain why retail parks differ so markedly across Europe. While policy supported the format’s growth in some countries, in others, it constrained it. The result is a sector with common characteristics but very different local expressions.

Read the full ‘Thought Leadership’ article at the link below