Be prepared
Published: 18 March, 2009
Tessa O’Neill, director of planning at architects BDP, told the BCSC’s Shopping Centre Management conference that the end of the development boom need not spell the end of innovation in shopping centre design.
“As developers put their large schemes on hold, architects are still doing masterplanning work,” she said. “It’s about being prepared and we’re using this time to rethink our masterplans.”
Although she warned that last year’s 13m sq ft of completions would subside to something nearer 2m to 4m sq ft pa for the foreseeable future, O’Neill said that many of the design trends that emerged in the latest crop of schemes would continue to be relevant, especially at a time of heightened competition.
Taking Liverpool One as an example, she said that several of its design elements would become common in smaller schemes, notably the return to open-air shopping and the close integration of retail and leisure.
“Consumers are still searching for a stimulating shopping experience,” she asserted. “Although they’re focusing on price, they don’t want to sacrifice the quality of the experience.”
And reflecting this new price-consciousness, O’Neill forecast that supermarkets and value retailers would emerge as major anchors in the next generation of shopping centres. “I think we’re going to see the rise of a new type of convenience centre going forward,” she said.
“We expect more use of iconic design as developers look to create a point of difference and create a unique brand for their centre, in contrast to the sameness of much modernist retail design in the post-war era,” she forecast. “We’ve already seen that in places like Victoria Square, Belfast.”
O’Neill said that Westfield London had “raised the bar” with its high-quality catering offer and the segregated luxury zone. “The lesson for other developers is that the catering mix needs to be managed as aggressively as the retail mix to ensure that it meets the needs of the shopper,” she said.
But she commented that the centre’s lack of integration with, and enhancement of, Shepherd’s Bush was a disappointment.
“It’s the attention to detail that provides the difference between a good and an excellent shopping centre,” she said, highlighting the quality of the seating and the information pods at Westfield. And she also picked up on the quality of the exterior finishes: “The shopping centre experience shouldn’t begin at the door. It begins as you approach the centre.”
Looking to the future, O’Neill predicted that new schemes are likely to be smaller and less complex than of late. “We need to be more fleet of foot and the cost and length of time taken by the planning system needs to be reduced,” she said.
Another trend O’Neill expects to see emerging is a renewed focus on refurbishment. “Owners are going to have to sweat their existing assets through refurbishment and extension,” she said. “The Manchester Arndale has b
een reinvigorated by its extension, and at Highcross in Leicester we saw the new space well-integrated with the wider shopping area.”
But she pointed out that this does not have to be an expensive process. “Some centres just need a really good clean,” she said. “We expect to see simpler refurbishments, perhaps permitting owners to allow service retailers and community facilities to add to the centre experience.”
And in straitened times sustainability could become even more of an issue, O’Neill forecast. “Now, more than ever, we need to achieve maximum efficiency,” she said.
“Enclosed malls should consider naturally ventilating their common parts to achieve cost reductions and a more comfortable environment for the shopper, and we will see increased use of natural light alongside new lighting technology like LEDs and fibre optics.”
She concluded on an optimistic note. “Because they are under one ownership shopping centres are well-placed to make the changes needed to become more sustainable,” she said. “We need to see a flexible approach to maintaining occupancy, perhaps with rental holidays, bringing in service users to fill voids and the increased use of short term lettings.
“There’s unlikely to be a single trend going forward, but we all need to rethink our habits and expectations,” she concluded.
Two key speakers at the SCM conference highlighted how both managers and developers need to take advantage of the downturn to position themselves for the upturn. Graham Parker reports
Asset managers must take a more proactive approach in order to deliver income and value to investors, according to Lawrence Hutchings, director of UK shopping centre investment management at Hammerson.
“There’s an enormous amount of short-termism that’s crept into our business and everyone else’s,” he reminded the audience of shopping centre managers. “But we will move out of this and we need to be prepared.”
Financially, he said this meant owners will move from focusing on capital conservation and cost management back into investment, and when this happens he expects to see consolidation in the investment community. “Yields will stabilise, and then there will be opportunities for corporate activity. The UK currently has the most diversified shopping centre ownership of any G8 market,” he said.
But for the time being owners – especially the REITS – will be looking very carefully at cashflow, according to Hutchings. “In the leasing market we’ve moved from incentives into real pressure on headline rents and empty rates are becoming an issue as voids grow,” he said. As a result, alternative income streams – in the form of car parking revenue, commercialisation and temporary leasing – are growing in importance.
And he added: “Never has driving retailer sales been more important. Retailers only keep stores on after a pre-pack if they’re profitable, so now it’s absolutely crucial in keeping a centre occcupied.”
Hutchings also focused on the need to look at opportunities with existing retailers. “Never forget that the greatest retailer demand is already within the four walls of your centres,” he told the managers. “You all have retailers who could expand if you help them and that’s much cheaper than bringing in a new retailer into your centre.”
But to achieve this, Hutchings said every centre needs a clearly identified market positioning, ideally one that none of its competitors is occupying. “We need to be asking ‘what are we trying to achieve, what are we trying to be?’ and then to ask ‘is there an opportunity to extend the market by moving into new categories,’” he explained. “The centres that are performing well are those that have a clear idea of who they are, and therefore are prepared to say no to some retailers, even in the current market.”
Hutchings concluded: “Right now we are seeing a flight to quality – the dominant centres in our larger towns and cities will continue to outperform the weaker centres – and so it is even more important that they up their game in order to compete and succeed.”
