European shopping centre openings down 28% year-on-year
Cushman & Wakefield’s annual ‘European Shopping Centre: The Development Story’ report shows that approximately 2.6 million sq m of new shopping centre space was completed in 2018, 28% below the amount added in 2017. The 2018 figure represents the lowest level of completions for 24 years and is comparable with the volumes delivered in the early 1990s when the first traditional shopping centres in Central and Eastern Europe were opening.
However, while the pace of new development has been slowing over the past five years, the total size of the European market is still growing – and now stands at 168.1m sq m – increasing shopping centre competition. As developers try to retain their market positions, they are focusing efforts on redevelopment and refurbishment projects, aimed at creating sophisticated, modern and aesthetically pleasing shopping and leisure centres.
Report author Silvia Jodlowski, senior research analyst at Cushman & Wakefield, said: “Opportunities for new shopping centre development are seen mainly in two types of schemes. Dominant innovative schemes with a strong leisure element, in place of aging unattractive schemes, or smaller convenience/community retail schemes, where distance to the store, the presence of a food operator and appropriate tenant mix are crucial factors for a scheme’s success.”
In the UK, although the ongoing shift to online has resulted in store closures, oversupply is not holding back shopping centre development. Rather than discouraging further development, it has merely focused developers’ interest in driving footfall as they strive to create unique and interactive shopping experiences via leisure extensions and mixed use developments. The UK was the third most active development market in Western Europe in 2018, with 147,000 sq m of new space delivered, of which 74% was contained in two developments. This represented an 8% rise on 2017.