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The Meyer Bergman Approach to Retail Property Investment Explained

We recently spoke with Peter Evans, Vice President of Meyer Bergman, about the company’s latest projects across the globe.
Peter Evans, Vice President of Meyer BergmanWe also took the opportunity to talk about their overall approach to choosing, running, and then selling properties. Peter started off by telling us that they are “totally opportunistic” and are “looking for deals all over Europe”. He pointed out at this stage that he doesn’t get involved with the American business, as there is a separate team in the company that deals with this region.

Assets in Several European Countries

He then pointed out that they currently have assets located in France, Norway, Germany, Ukraine, Denmark, Poland, the Czech Republic, the UK, and Ireland. Peter told us that their main strategy is to look at properties where a good deal can be done and money can be made. However, he pointed out that “every country has got its issues at the moment”, stating that uncertainty in the UK and the US over recent elections and referendums has stopped big deals being done there.
When asked about the immediate future for investing in the UK, Peter said that “nothing much is going to change over the next 2 years” while uncertainty hangs in the air around the Brexit issue and the possibility of a change of Government. As the conversation moved on to Eastern Europe, Peter pointed out that Meyer Bergman has recently invested in Poland and the Czech Republic, which are countries that they know well. However, they have not been making any big moves in the countries where they don’t understand the local market as well.

The Concern Over E-Commerce

In terms of finding ways to run shopping centers more efficiently in the countries where they are present, Peter said that e-commerce is one of the “big concerns” because it takes potential shoppers away from the centers. However, he confirmed that the penetration of internet shopping is far lower in Eastern Europe than in countries such as the UK. In the UK, online shopping currently represents some 20% of all sales, while in the Czech Republic this figure is lower at around 4% or 5%.
While many Eastern European retailers already have an online platform, it is something they don’t particularly push just now.  However, they are aware that it is “going to become more of an issue” as time goes by. At the present, Meyer Bergman are trying to “feature-proof” their centers by adding features to the malls that can’t be found by shopping online, such as a good selection of food and beverage outlets. 

Galeria Katowicka

As an example of this, Peter mentioned that their Galeria Katowicka in Poland has had 5 food outlets added to it. He also pointed out the importance of adding gyms, health clubs, and spas to their shopping centers in order to “provide more of an experience” for their customers. He also pointed out that all of their properties have cinemas in them, which helps to extend the hours of the food and beverage demand.

The Role of Pop Up Stores

  We then asked him for his thoughts on temporary, pop up stores in shopping centers. Peter said that these are typically used when there is a long term vacancy or some sort of longer term plan to re-organize the space. He also said that an interesting design can lead to a chance to aggressively promote a product or brand using a pop up store. However, he feels that it isn’t a good idea to have a lot of pop ups in a center, as they don’t bring in much rental money or add to the value when selling.

When it comes to selling properties, this year they have sold 2 department stores in Berlin and a building in Paris, while buying 2 department stores in Oslo this year too. He said that their mandate is to invest across Europe whenever they see a potential good deal in any type of retail property. 
Moving on to look at Western Europe and luxury retail, he said that they have “done well” out of their luxury retail stores in the last few years because it is an easier segment to get through “troubled times”.  In fact, Peter said that they “would like to invest more” in the luxury sector. Using the example of Oslo, he pointed out that it is an emerging market in the city in which they have invested heavily. He went on to say that in difficult times it is important to offer quality.

The Meyer Bergman Approach

Peter summed up the Meyer Bergman approach by saying that they buy buildings, add value to them and then sell them once they have added sufficient value. This means that they are only interested in buying properties that can be turned around and made into something that would attract high paying buyers. He gave us examples of how they have done this lately with the Bentall Centre in London and a shopping center in the Czech Republic. 

In some cases they will fund the development and take it through the initial stabilization stage. This was the case with Forum Nova Karolina in Ostrava in the Czech Republic, which they have stabilized and now has around 10 million visitors going to it annually. This means that in the near future they will be ready to look to sell it.

Forum Nova Karolina in Ostrava

Peter then talked to us about the importance of picking the right property, treating their tenants like business partners and in getting the right tenant mix in place to make it an attractive place to visit. He closed out the conversation by pointing out that if the building is in the wrong place, has too much local competition or has the wrong anchor then there is usually little that can be done to make it a more attractive investment proposition.

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