European Retail's Best-Kept Secret?

HELSINKI, FINLAND—It's a market that is becoming increasingly urbanized and, at the same time, habituated to regarding the shopping center as a community hub. Yet Marcel Kokkeel, CEO of shopping center owner/developer Citycon Corp., says the Nordics are “the best-kept secret in retail.”

A key reason, Kokkeel tells GlobeSt.com, is the region's size: a total of 25 million people among Sweden, Finland, Norway and Denmark. “So why should you invest in those smaller countries?” he asks. The reason is that “there's a pool of wealth to gain. Everybody who has invested in this region has made pretty good money. Interest is growing, and it's not a secret anymore.”

He cites some of the US-based investors that already have made inroads into Nordic retail, among them Starwood Capital Group, the Blackstone Group, the Carlyle Group and Cornerstone Real Estate Advisers. The region boasts tremendous liquidity, Kokkeel adds: “last year, there was 42 billion euros of commercial real estate traded in the Nordics, which is 17% to 18% of the entire European volume” for 2015.

That's especially remarkable when one compares the Nordic region's population to other leading European markets. It's less than half the UK's 65 million, for example, and less than one-third of Germany's 80 million. However, Kokkeel points out, “urbanization came late” to the Nordics, and today the region boasts the four fastest growing cities in Europe, led by Oslo and Stockholm.

“Capital cities in the Nordics are getting more and more important,” he says. “And that's where we are.”

Helsinki-based Citycon has a portfolio of 60-plus owned and managed shopping centers across the Nordics; it's the number one retail owner in Finland and among the market leaders in Norway and Sweden. “You see a lot of shopping centers in the Nordic countries,” Kokkeel explains. “There isn't a lot of street retail, because it's cold and it's dark. And people here are very efficient, maybe because it's cold and dark—you have to be efficient. So they go to shopping centers, which most of the time are closer to their homes than in other countries.” And with per capita incomes among the highest in Europe, Nordic shoppers can afford to visit often.

The typical center in Citycon's portfolio ranges from 200,000 to 400,000 square feet, grocery-anchored and with other elements including healthcare, education and municipal services. “We have all of these things in our properties because it's convenient and because it drives people to your shopping centers, which are real community centers,” says Kokkeel.

Another feature the centers have in common: easy access to public transportation. “I think public transportation is, together with urbanization, a mega-trend in the world,” says Kokkeel. “And especially in the Nordics, you see it growing. The youngsters in Stockholm don't want to have a car anymore. It's a financial burden, and you can't park. So why should you? You can go to work or to the shopping center because it's all close by and all connected to public transportation.”

Domestically, retail owners have been slower to adopt the idea of incorporating healthcare into their tenant mix. “In Europe, we learned a lot about shopping centers from the US,” Kokkeel says. “But I think we can teach you here as well. Wherever you go, the future trend is that people love to be in urbanized areas. They don't have enough time to spend, so let's make it efficient. If you bring all of these items together, then you concentrate customer flow, which is good for everybody. Especially when you talk about online retail, which will continue and continue, then it's great that you can drive people to your shopping centers for reasons other than retail. If you go to the dentist, you will pass our shops, I promise you, and you will buy something.”

HELSINKI, FINLAND—It's a market that is becoming increasingly urbanized and, at the same time, habituated to regarding the shopping center as a community hub. Yet Marcel Kokkeel, CEO of shopping center owner/developer Citycon Corp., says the Nordics are “the best-kept secret in retail.”

A key reason, Kokkeel tells GlobeSt.com, is the region's size: a total of 25 million people among Sweden, Finland, Norway and Denmark. “So why should you invest in those smaller countries?” he asks. The reason is that “there's a pool of wealth to gain. Everybody who has invested in this region has made pretty good money. Interest is growing, and it's not a secret anymore.”

He cites some of the US-based investors that already have made inroads into Nordic retail, among them Starwood Capital Group, the Blackstone Group, the Carlyle Group and Cornerstone Real Estate Advisers. The region boasts tremendous liquidity, Kokkeel adds: “last year, there was 42 billion euros of commercial real estate traded in the Nordics, which is 17% to 18% of the entire European volume” for 2015.

That's especially remarkable when one compares the Nordic region's population to other leading European markets. It's less than half the UK's 65 million, for example, and less than one-third of Germany's 80 million. However, Kokkeel points out, “urbanization came late” to the Nordics, and today the region boasts the four fastest growing cities in Europe, led by Oslo and Stockholm.

“Capital cities in the Nordics are getting more and more important,” he says. “And that's where we are.”

Helsinki-based Citycon has a portfolio of 60-plus owned and managed shopping centers across the Nordics; it's the number one retail owner in Finland and among the market leaders in Norway and Sweden. “You see a lot of shopping centers in the Nordic countries,” Kokkeel explains. “There isn't a lot of street retail, because it's cold and it's dark. And people here are very efficient, maybe because it's cold and dark—you have to be efficient. So they go to shopping centers, which most of the time are closer to their homes than in other countries.” And with per capita incomes among the highest in Europe, Nordic shoppers can afford to visit often.

The typical center in Citycon's portfolio ranges from 200,000 to 400,000 square feet, grocery-anchored and with other elements including healthcare, education and municipal services. “We have all of these things in our properties because it's convenient and because it drives people to your shopping centers, which are real community centers,” says Kokkeel.

Another feature the centers have in common: easy access to public transportation. “I think public transportation is, together with urbanization, a mega-trend in the world,” says Kokkeel. “And especially in the Nordics, you see it growing. The youngsters in Stockholm don't want to have a car anymore. It's a financial burden, and you can't park. So why should you? You can go to work or to the shopping center because it's all close by and all connected to public transportation.”

Domestically, retail owners have been slower to adopt the idea of incorporating healthcare into their tenant mix. “In Europe, we learned a lot about shopping centers from the US,” Kokkeel says. “But I think we can teach you here as well. Wherever you go, the future trend is that people love to be in urbanized areas. They don't have enough time to spend, so let's make it efficient. If you bring all of these items together, then you concentrate customer flow, which is good for everybody. Especially when you talk about online retail, which will continue and continue, then it's great that you can drive people to your shopping centers for reasons other than retail. If you go to the dentist, you will pass our shops, I promise you, and you will buy something.”