By Tom Bill
CANNES, France, March 17 (Reuters) - As growing numbers ofshoppers move online, European mall owners are looking to pullin customers by including services that can't be replicated onthe Web like hospital care and government offices.
Malls must become more like full-service community centresto survive in the face of a growing list of failed retailerslike HMV and Blockbuster, property experts at the annual MIPIMtrade fair in Cannes, France, told Reuters.
On the flip side of that retail revolution, the experts seebig gains in warehousing as more goods are sent and returned viapost.
"The days of the stand-alone mall are numbered," said DavidRoberts, the chief executive of architect Aedas, one of the fivelargest practices in the world. The company has been involved incity masterplan projects in Asia, Europe and the Middle East.
"In 20 years time you will find stores that sell books andDVDs replaced by sites that give people a reason to go the mall... art galleries, education centres and health and spatreatments."
Florencio Beccar, fund manager of CBRE Global Investors European shopping centre fund, cited the recent purchaseof a mall in Germany, saying the fact it included a largemedical centre was "a big plus".
"I once saw a clinic in a Brazilian mall where you checkedin and are buzzed on a device when they are ready. In themeantime you go shopping," he said. "With the ageing populationin Europe you can see that happening more and more."
CBRE Investors, which has about 14 billion euros ($18.2billion) of retail property under management in Europe and 5,000tenants, also owns a mall in southern Sweden with a library anda local municipal office, he said.
"More shopping centre developers will have early talks withthese sorts of tenants as well as the big anchor retailers,"Beccar said.
Mall owners like Land Securities, Intu,Westfield and Klepierre have increased thenumber of restaurants and cinemas to persuade shoppers to staylonger, and offer promotions to reward frequent shoppers who canbe tracked via their mobile phones.
COMMUNITY CENTRES, ADVENTURE PARKS
But these steps don't go far enough, some experts say, inlight of a forecast last month that 90 percent of retail salesgrowth in Britain, France and Germany between 2012 and 2016, or91.5 billion euros, is expected to be online, according to theproperty arm of French insurer AXA, which manages 43billion euros of assets.
As well as changing what's inside, mall owners will need toborrow ideas from developing markets like Dubai and China wherecentres are part of wider mixed-use developments where peoplelive or include open spaces where they spend leisure time,Roberts said.
"Convenience and Internet shopping has created a breakdownin community structures and there's a gap there waiting to befilled," he said.
"There is a complete lack of vision among many shoppingcentre owners," said Joe Valente, a managing director at JPMorgan Asset Management, who helps manage 7 billioneuros of real estate in Europe.
"The big thing that's missing is that unlike almost everyother industry they haven't caught on to building their ownbrand. Why not have a bluewater.com?" he said, referring to thelarge mall of the same name in southeast England.
"Landlords fear cannibalising sales but in 10 to 15 yearsthey won't have a choice because they will be cannibalisedanyway," he said. In other words, a growing number of shopperswill move online whatever malls do.
"On a mall website you could book a parking space, arestaurant table or your car to be valeted. Why do people go toCovent Garden?" he asked of the central London district.
"There's nothing there you won't find anywhere else but Iwould argue it's a strong brand."
Christian Ulbrich, chief executive for Europe, Middle Eastand Africa at property consultant Jones Lang LaSalle,said: "Stores will get bigger and become more like adventureparks that attack all of your emotions.
"For example, Globetrotter has a climbing wall and cycletrack in its Frankfurt store to try out its products," he saidof the German outdoor clothing and equipment retailer.
WAREHOUSING
While retailers and mall owners struggle to find answers,all agree that warehouse property owners are the bigbeneficiaries of the change in retail habits.
Every additional 1 billion euros of online sales resulted inan average additional warehouse demand of approximately 72,000square meters in Britain, Germany and France over the last fiveyears, a report from warehouse landlord Prologis saidlast year.
"Logistics is the new retail," said Simon Hope, global headof capital markets at property consultant Savills,referring to the way changing consumer trends will affect theway investors see property.
"There is a trend of money moving away from all but the bestand most regionally dominant malls into logistics as they areeconomically shielded," he said.
The fact that the Norwegian and Chinese sovereign wealthfunds have recently invested in the sector, as well as a reportthat Brookfield, lower Manhattan's largest officelandlord, is trying to do the same, shows serious bets are beingmade on logistics property, Hope said.
Yields for high quality logistics property can be six orseven percent versus four or five percent for top shoppingcentres.
As another example of how retailers may re-think theiroperations, some are likely to club together to operate out ofsmaller logistics sites close to city centres to enable same-daydeliveries, a service increasingly in demand, Ulbrich said.
"The issue they all face is that shopping is no longerenough of a reason to go to shopping centres."