BNP Paribas Real Estate Investment Management (BNP Paribas REIM) manages some €4.B* of retail assets across Europe. The sector is the second-largest in which we invest on behalf of our clients. Online commerce is polarising the fast-evolving retail industry to devastating effect for those businesses that do not adapt. This is having profound effects on the real estate industry and how we approach the asset class.
Although growing online sales mean a retailer needs fewer stores than before to reach consumers, physical locations continue to fulfill an important function. A store raises a brand’s visibility with shoppers, showcases a product range and helps build customer loyalty by creating an experience or through interaction with sales assistants.
Property investors need specialist expertise to chart a course through the disruption in retailing when making an investment in this sector. We help clients make the right decisions when it comes to investing in retail properties, drawing on best-in-class research and our hands-on experience of managing these assets on a daily basis.
Case Studies of Our Expertise in Navigating the Disruption in Retail
Repurposing a Milanese Landmark into a Prime Mixed-Use Asset
The asset Garage Traversi was built in the 1930's as Milan's first multi-storey car-park. Drawing on our local market knowledge and research, we identified that converting this city landmark into a luxury, retail-led, mixed-use asset would maximise value from its prime location, close to the Duomo in Milan. We acquired the property for an institutional fund, and our asset management team is overseeing its redevelopment with an approach that is sensitive to the building's location and architectural interest.
A Community-Facing Retail Park with a Diversified Offering
This retail park of approximately 42,000 sq.m. in an established suburban location of Lille was purchased on behalf of a fund for individual investors. The transaction was underpinned by our on-the-ground insights, which indicated that Heron Parc had strong loyalty from the surrounding catchment because of its cinema, leisure attractions and restaurants. This investment illustrates our expertise in stock selection in sourcing a defensive asset with a diversified tenant base.
Sourcing a 47-Property Italian Supermarket Portfolio
This €250M transaction highlights our ability to source a large portfolio of retail assets. We acquired a portfolio of seven hypermarkets and forty supermarkets in Italy for a retail-focused fund. Coop Alleanza was selling the portfolio as part of a restructuring plan. Our research showed that supermarkets are comparatively sheltered from the difficulties facing other areas of retail, as they sell food and staple products instead of relying on discretionary spending by consumers.
Using Local Knowledge to Acquire a High-Quality Portfolio
Research has shown that High Street stores in the right locations and occupied by high-calibre tenants are better placed to survive the polarisation under way in retailing. We structured the purchase of ground-floor retail units at 10 buildings in Paris so that two of our funds could co-invest alongside each other. This transaction shows how we are able to use our local knowledge of submarkets to acquire a high-quality portfolio.
* As of 31st December 2018