UK shopping centre development falls sharply
9 Nov, 2009, London
2010 is likely to see the lowest amount of new shopping centre space opening in the UK in almost 15 years. According to real estate adviser Cushman & Wakefield’s new Shopping Centre Development Report, only two new centres of more than 40,000 sq.m are due to open in 2010.
St David’s 2, Cardiff has been the biggest new shopping centre to open in 2009 at 89,880 sq.m. Union Square, Aberdeen, has been the second largest opening of the year at 50,166 sq m. In 2010, The Rock in Bury at 49,806 sq m and Eldon Square in Newcastke-upon-Tyne at 40,000 sq m will be the largest openings.
Cushman & Wakefield expects completion levels to pick up in 2012, although the focus will remain on extensions and redevelopment. A major exception will be Westfield’s Stratford City which, at 175,000 sq.m will become the largest urban shopping centre in Europe when it opens in 2011.
2008 was a record year in the UK when new shopping centres equivalent in size to more than six Bluewaters opened. This 945,000 sq m of space was the largest new supply of centres since Cushman & Wakefield began monitoring the market in 1965, with the opening of the UK’s first covered shopping centre in Elephant & Castle, London.
The onset of the credit crunch in Autumn 2007 and falling confidence in the economy meant many schemes were either put on hold or delayed until market conditions improve. Those schemes that opened in 2008 and already in 2009 were all conceived during periods of economic confidence, although the highest profile of these – including Liverpool One, Leicester Highcross and Bristol’s Cabot Circus – all opened almost fully let such was the demand for space from retailers.
Justin Taylor, head of shopping centres, Cushman & Wakefield, said: “We are definitely experiencing more demand and on improving terms than earlier in the year, however, parts of the market remain more difficult. London remains strong, as do the major metropolitan cities and prime dominant shopping centres. This is evidenced by schemes such as Liverpool One, which is now virtually fully let, and reports from landlords such as Liberty, which have reported improved occupancy rates to 98.9%. We anticipate this demand will continue, particularly given so many shopping centre developments have been put on hold, leading to less supply.”
Alexander Colpaert, retail analyst, Cushman & Wakefield, said: "It is clear that the pace of shopping centre development in the UK is set to fall sharply in the next two years. The shopping centre pipeline for 2010 is more then 50% down on the 10-year average annual completion level. Whilst retailer demand for the very best centres has been relatively good, for some schemes landlords have had to provide significant incentives to attract tenants. The fall-off in shopping centre development in the UK is broadly in line with the trends seen in continental Europe. However, Eastern Europe has been more adversely affected by the economic recession, with some shopping centres closing soon after completion, whilst other schemes have been mothballed mid-construction.”