Development activity on the wane across Europe, finds C&W
The growth in new European shopping centre space has started to slow, as mature European markets begin to reach the peak of space required, according to the latest research from Cushman & Wakefield.
Over the last two decades, Europe has seen an average of 5.4 million square metres (sq m) of new shopping centre space built every year, but an annual average of just 3.5 million sq m of new space is scheduled to be completed in 2018 and 2019. Established retail markets and a shift towards online shopping have reduced the need for new space across Europe.
The UK was the most active Western European country in terms of new openings, adding nearly 90,000 sq m of new space in H1 2018, driven mainly by the 69,000 sq m extension of Westfield Shopping Centre in White City, London. However, weaker demand for space, the growth of online retail, high levels of supply, and higher operating costs have curtailed development activity.
In the first six months of 2018 Western Europe saw 373,000 sq m of new space created, an 8.2% year-on-year rise, taking the total space available to 108.8 million sq m. However, in H2 2018 and 2019 the region is expected to see just 2.1 million sq m of new space created, a fall of 25% year-on-year. Meanwhile, in the less mature Central and Eastern European market, 676,000 sq m of space was created, an 18% fall year-on-year, taking the total to 57.4 million sq m of space. In H2 2018 and 2019 the region is expected to see the creation of 4.0 million sq m of space – a 2.4% y-on-y fall.
Although the need for new shopping centres is falling, ageing stock in the most mature markets presents a significant opportunity for redevelopment. One third of Europe’s shopping centre space was originally built more than 20 years ago.
Silvia Jodlowski, Senior Research Analyst at Cushman & Wakefield, added: “Most of Europe has now had over twenty years of continuous shopping centre development – much more in the case of established markets such as the UK, France and Germany. Arguably, most European shopping centre markets are at or near maturity, with net new additions to space likely to slow considerably. As a result, development will focus increasingly on the revitalisation and renewal of existing space, as a growing number of older schemes become obsolete. In fact, over one third of Europe’s shopping centre space is now over twenty years old and, while much of this space has been refurbished and remodelled over time, equally much of it is ripe for redevelopment.”