Mall development falls to early 1990s levels
Published: 09 August, 2011
The rate of shopping centre construction activity has fallen to similar levels seen during the early 1990s recession, limiting opportunities for retailers to expand, according to the latest research from CB Richard Ellis (CBRE).
Shopping centre development has fallen to less than 25 percent of levels recorded in the first half of 2007, immediately before the onset of the credit crisis, and continues to contract in Great Britain with new completions set to provide less than 3m sq ft of space in 2011. More than half the total of new shopping centre space completed this year is accounted for by a single scheme, the 1.9m sq ft Westfield Stratford due to open next month.
However, unlike the early 1990s recession, when new scheme proposals and consent levels declined sharply, the overall development pipeline has remained relatively stable. The decline continues to be more to do with nominal delays than schemes being scrapped altogether, albeit ‘distressed’ schemes – those where developers are in administration or cannot progress schemes for financing reasons – have inevitably grown in number.
Due to the length of time it takes to get planning consents and the cost of holding land for development, it is clear that some shopping centre schemes will inevitably be cancelled resulting in further pipeline contraction. CBRE expect the current pipeline total of around 60m sq ft to fall to about 40m sq ft over the next three to four years.
Mark Disney, shopping centre development & leasing director, CB Richard Ellis, said: “Retailer demand is increasingly focused on larger shopping centres, but the lack of new development is limiting opportunities. We are seeing strong demand for new space in schemes such as Westfield Stratford, but demand is also strong for space in established major shopping centres like Bluewater, Meadowhall, and the Trafford Centre.
“The market is now gradually adapting to developers’ requirements to see committed income before starting on-site. We are also seeing greater evidence of retailers being prepared to agree pre-lettings as they play their part in unblocking the pipeline to deliver the space that they need. After the current hiatus in the pipeline, we expect that a flow of new schemes will begin to be delivered to the market from 2015/2016 onwards.”
