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Daniel Losantos, the newly appointed CEO of Spanish outlet centre operator Neinver, believes the opportunities for developing outlet centres in Europe are diminishing and that sector consolidation is on the way.

In an interview with PropertyEU, he outlines the priorities in his new role and the opportunities and challenges facing the European outlet sector.

What are the main priorities in your new role at Neinver?
Losantos: Within Neinver’s corporate culture, innovation is a key point and with increasing global competition, it is clear that true differentiation can come only through consistent innovation. Neinver has always been a pioneer as far as its projects are concerned, and it is one of my top priorities to ensure that we continue to make a difference for our stakeholders and partners, investing in niche strategies with specialised asset management and continually adapting and reinventing our business model. Innovative cycles are becoming shorter and shorter and to be successful we must be able to anticipate change.

A clear example is how retail and real estate are dealing with digitalisation and the implications it has for the business. Many see it as the next great challenge – I like to see it as the next huge opportunity. At Neinver we are working hard to redefine how we interact with our customers and to make sure we continue to offer an ever improving shopping experience offline and online.

What is the outlook for the European retail outlet market?
Losantos: Today’s European retail outlet market is vibrant, with increasing interest from newcomers in the sector on both the operational and the investment side. This is very positive as it will bring more competition to the asset class and further consolidate a sector that has shown remarkable resilience with incredible growth figures for both visitors and sales despite a consumer crisis.

Neinver ended 2014 with more than 41.8 million visitors - up 6% from 2013 - and sales up by 11% at over €957.85 mln compared with the year-earlier period. We are starting to observe yield compression in the outlet market both in valuations and in prices paid in recent - and very competitive - asset sales processes. However, we should not lose sight of the fact that it is specialised, intensive asset management with very clear and well executed retail strategies that drives sustainable increases in visitors and sales.

Is there scope for more outlet centres in Europe and if so, in which markets?
Losantos: The outlet concept has become a key channel within the distribution strategy of brand manufacturers. Retailers consider outlet stores to be one of the most profitable elements of their multi-channel strategies, according to a recent Ecostra report.

Although sector consolidation is expected, as happened in the US a few years ago, there are still a few unique opportunities for developing outlet centres in Europe. These will diminish with time and become more and more complex. Developing successful outlet centres today requires a rare blend of entrepreneurial DNA and highly specialised asset management skills to manage the different phases involved throughout the property cycle.

Neinver is currently developing Viladecans The Style Outlets in Barcelona, a 26,500 m2 project with a targeted opening in the autumn of 2016. We are also working on the company’s first development in the Netherlands, Amsterdam The Style Outlets (19,000 m2 GLA). Additionally, we are working on development opportunities in France and Germany, where there is a lower outlet density in terms of GLA/inhabitant. Overall we manage 555,300 m2 GLA of retail space at 2,000 store locations in France, Germany, Italy, Poland, Portugal, Spain and in the near future, the Netherlands.

What are the main challenges/threats ahead for the European retail industry?
Losantos: The outlet sector is highly specialised and requires a good understanding of its dynamics by investors, lending institutions and other public and financial authorities involved in development opportunities. Working with an established operator with a successful track record and a specialized team will definitely make the difference – especially with the upcoming consolidation in the sector.

The long process of developing a property — from pre-development to opening — and the increasing demands by investors and authorities regarding criteria such as good governance, sustainable development and long-term commitment, are other key issues. Neinver is meeting these challenges by forming strategic partnerships (such as with TH Real Estate and Colony Capital ed.) and by managing all its properties in accordance with sustainability standards such as BREEAM or ISO.

Retail is evolving towards a model where the physical and the digital worlds merge into one, offering customers unique shopping experiences. For operators, the challenge is to provide complete service to both brands and consumers and, therefore, turn digital into an opportunity. Neinver is working on a digitalisation process as part of an omni-channel strategy aimed at offering a comprehensive, centralised service to brands and consumers.

What are your interests outside the office?
Losantos: Having lived abroad for some years, I enjoy travelling, exploring new places and connecting with different people. It is very enriching and expands one’s perspective about things. I love practising different sports – skiing, golfing, kite-surfing; you name it. The season determines the sport of the month!

What are your 3 favourite buildings in Europe?
Losantos: We are surrounded by so many great buildings that it’s almost impossible to pick just three. Some of the iconic designs that amaze me are La Sagrada Familia by Gaudi in Barcelona or Frank Gehry’s Guggenheim Museum in Bilbao. Although not in Europe, The World Trade centre in New York City is really stunning on a number of levels – there’s so much more to it than the architectural part...