Redevco creates one of Europe’s largest retail warehouse park asset management platforms at €4.5 Billion AuM

March 15, 2023

Redevco has established one of the largest retail warehouse park (RWHP) asset management platforms in Europe with assets under management (AUM) of €4.5 billion. The platform was created by combining the properties of Germany’s redos, in which Redevco acquired a majority stake last year, with its existing retail parks, mainly in Belgium. The 180 assets with a total gross lettable area (GLA) of 2.5 Mio square metres distributed across Germany (60% of GLA), Belgium (38% of GLA) and France (2% of GLA) offer great sustainability potential and together form a major contribution to Redevco’s mission to lead the transformation of cities to ensure they are sustainable and liveable.

The RWHP market was not only the strongest performing retail sub-segment in the Covid pandemic period, thanks to the predominance of ‘convenience retailers’ such as hypermarkets and DIY stores in the average tenant mix, but with the potential for mixed-use ‘densification’ developments RWHPs could also play an important role in relieving the urbanisation pressure and limiting urban sprawl. In addition, the RWHP market could potentially be one of the most sustainable retail real estate sectors due to the vast possibilities to implement renewable energy solutions and measures, reducing the assets already relatively low carbon intensity.

Herman Jan Faber, Head of Business Development at Redevco said: “Redevco’s creation of one of the largest retail warehouse park asset management platforms in Europe, within the most resilient and best performing retail investment market sub-segment, coincides with what appears to be a bounce-back in retail real estate values after years of pressure from e-commerce competition and more recently the Covid pandemic. Even more noteworthy is that nearly half of our total €9.7 billion in assets under management can be transformed to create positive impact and help make cities more sustainable and liveable.”

Aggregated prime yields for retail warehouse parks in Belgium, Germany, Spain, France and the UK, were lower in September 2022 at 5.49% than pre-Covid in March 2020 (5.60%), according to research from agent Cushman and Wakefield. The RWHP retail sub-segment also displayed strong rental stability with +4% growth over the same period compared with shopping centres (-10%) and high street shops (-17%.) Still elevated retail warehouse park yields offer a buffer to absorb higher interest rates in the medium to long-term, as does the widespread inflation linked indexation of rents, the agent concluded.

The pan-European scale of the combined RWHP platform offers Redevco great potential to expand its renewable energy production through solar panels to supply tenants, electric vehicle charging hubs and local power grids. By the end of 2022, Redevco had installed ca. 32,000 photovoltaic panels at its Belgian retail warehouse parks under its ‘Project Solar’ initiative, representing a generation capacity of 11.6 MWp, equivalent to powering nearly 2,800 households on an annual basis. Project Solar will ultimately contribute around 25% of the CO2 reduction abatement needed for the assets under management to move towards net zero carbon by 2040.

A recent JLL research report concluded that ‘place making’ in European retail warehouse parks has been surprisingly limited for generally large sites typically located on the edge of densely populated urban areas near arterial routes or motorways with excellent accessibility. This presents an opportunity for skilled investment teams to tap into high residual land values with mixed-used developments and active asset management of frequently under-exploited and under-managed locations.

Herman Jan continues: “We also have the opportunity to create the core of thriving neighbourhoods in and around our parks, which are usually located in the peripheries of urban areas. Retail-anchored mixed-use developments could, where local planning permits, incorporate affordable and sustainable residential properties, to address Europe’s housing supply crisis, as well as building on other functions such as last-mile logistics.”

 

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