Positive outlook
Published: 16 June, 2008
More than 1.25 million sq m of shopping centre space is due to open in the UK between now and the end of 2009 - equivalent in size to over eight Bluewaters - according to the new European Shopping Centre Development report from global real estate adviser Cushman & Wakefield.
The figure is one of the highest since 1965 when Cushman & Wakefield began monitoring the introduction and growth of shopping centres, and is evidence that, despite fears over the strength of the UK economy, there remains confidence in the long-term retail market.
In Europe the biggest boom in development is in Russia and Ukraine where over 3.2 million sq m and over 2.8 million sq m respectively are due to open by end of 2009. Spain, Romania, Poland and Turkey are next in the ranking before the UK at number eight, followed by France and Italy.
The three largest centres to open in the UK in 2008 are Liverpool One at 160,000 sq m, Cabot Circus in Bristol, with additional space of 102,000 sq m, and Westfield London at 150,000 sq m. The vast majority of retail space in these new centres has already been let to some of the UK's biggest and most successful retailers.
The UK is also witnessing the emergence of in-town regeneration schemes rather than out-of-town schemes in the mould of MetroCentre, Gateshead. Liverpool One, for example - the first phase of which opened on May 29 - is an open streetscape scheme integrated into the historic city centre, representing over £900m of investment into the region.
Justin Taylor, head of shopping centre leasing at Cushman & Wakefield, said: "The continued strength of retailer demand for space, despite a slow-down in consumer spending, is demonstrated by successful letting campaigns for this year's major schemes, which are almost fully let before they open. We expect reasonable retailer confidence to extend throughout 2008 when the next raft of shopping centre openings should prove that well designed central schemes can contribute to the wider regeneration of a city."
Alistair Parker, head of development consultancy at Cushman & Wakefield, added: "This new level of new town centre openings reflects both the favourable financial market when these schemes were in gestation and a structural shift in both government policy and consumer demand. These new schemes are bringing life and vitality back into city centres and none more so than in Liverpool with Grosvenor's Liverpool One. Whilst 1.25 million sq m of new shopping centre space sounds like a huge amount, BCSC figures show that of all new retail floorspace provided between 1999-2005, some 65 per cent was off-centre or out-of-town retail. Today there is actually less town centre retail floorspace than there was in 1980."
Despite new openings, the UK still lags behind a number of European countries in terms of shopping centre space per head of population. The UK has 244 sq m of gross lettable area per 1,000 population. Although this is higher than the EU average of 195 sq m, it is a long way behind Norway at the top of the rankings with 641 sq m, and countries such as Sweden, Ireland and the Netherlands. Also higher than the EU average but a little behind the UK are Spain, Portugal and France.
In 2007, 8.2 million sq m of new space was completed across Europe in a total of 320 new centres and 54 extensions. A total of more than 11 million sq m of new space in Europe is expected to open in 2008 and 2009.
Boris van Haare Heijmeijer, head of European retail services at Cushman & Wakefield, said: "The current boom in shopping centre development is set to continue into 2009, with an additional 20 per cent of new space due to come onto the market this year and next. Much of this development is in central and eastern Europe, where supplies of modern retail space are starting from a very low base, while in the more mature markets shopping centres are continuing to play a key part in city centre regeneration."
Regarding the affect of the credit crunch on shopping centre development, van Haare Heijmeijer observed: "A small number of schemes in the UK have been postponed because of funding or pricing issues, but apart from this there is little evidence at present across the rest of Europe that the credit crunch is affecting development pipelines."
