A recent report by property consultancy Lambert Smith Hampton (LSH) identifies an urgent need to deliver radical solutions for the repurposing and repositioning of assets across the UK’s shopping centre sector.
With nearly 20% of UK shopping centre space sitting vacant, LSH’s Shopping Centre Futures report argues that it is time to accept the reality that it is unlikely to ever be filled on commercially viable terms. Amid definitive evidence that the country has an excess of shopping centre space, the time has come to look at these assets in a different light.
The report highlights that, while shopping centres are among the assets to be most acutely impacted by ongoing structural changes in consumer and business behaviour, they also offer the biggest opportunities to drive forward the creative and radical reimagining of retail’s role within towns and cities.
Using a unique typology developed for the report, LSH has analysed every shopping centre to be transacted since the start of 2020 and found that repurposing opportunities are present in almost every case. Of the 100 shopping centres analysed in the report, almost half (46%) were classified in ‘replace’ or ‘reinvent’ categories, meaning they are best suited to either complete redevelopment or major repurposing.
As large assets usually under single ownership, shopping centres have the critical mass to enable strategic decisions to be made on how space is used. The required degree of repurposing activity will vary greatly between individual locations. For some struggling centres, the best option may be wholescale redevelopment that sees them completely replaced with new uses. For most centres, however, the retention of a significant volume of retail space will be essential to achieving the optimum mix of uses.
The public sector has a key role to play in leading repurposing activity, particularly in locations where the commercial viability of projects is challenging. Local councils have been actively acquiring centres for regeneration purposes across the UK, making more than one in five of all shopping centre purchases since 2016.
Local authorities are spearheading some of the UK’s most imaginative repurposing projects. Ambitious schemes such as the transformation of Nottingham’s derelict Broadmarsh Centre and the replacement of Stockton-on-Tees’ Castlegate Shopping Centre with a new urban park are among the most exciting placemaking projects currently being pursued anywhere in the country.
Private sector investors are also seeing opportunities in the shopping centre sector, making an increased volume of purchases with a view to adding value through repurposing and repositioning. This helped shopping centre investment to reach a four-year high in the year to Q2 2022.
Ultimately, blends of public and private sector capital and expertise will be needed to drive forward major repurposing and redevelopment projects. Shopping centres still have important roles to play within towns and cities, but bold new visions are needed to secure their long-term futures at the heart of communities.
Dr Steve Norris, national head of planning, regeneration and infrastructure at LSH, commented “Shopping centres are big, capital intensive and very visible projects and, as such, major change is often hard to deliver. But faced with more scrutiny over valuations and the changing dynamics of town centres, owners of shopping centres will increasingly be required to demonstrate vision and boldness.
“Though demand for retail space is in freefall, shopping centres are often uniquely located to deliver a range of other uses from education through to healthcare and housing. The repurposing and redevelopment of shopping centres should be a central pillar of the regeneration of the UK’s towns and cities, supporting economic growth and the government’s levelling-up agenda.”
