Extensions to established shopping centres will be a significant driver of new floorspace across Europe in the next two years, says Cushman & Wakefield’s latest European Shopping Centre Development Report.
The report's findings are in line with the conclusions drawn from PropertyEU's latest ranking of the top retail developers in Europe for the three-year period between 2014 and 2016. A number of leading players, including the winner of this year's ranking, Hamburg-based ECE, are increasingly focusing their attention on refurbishment and extensions. The same is true of Europe's largest listed retail real estate company Unibail-Rodamco.
According to C&W, landlords like ECE and Unibail-Rodamco are increasingly focused on pursuing the ‘right’ footfall by focusing on a combination of technology, data, events and entertainment, tenant mix and an improved leisure and food and beverage offer. By using data, owners can better target consumers who fit the tenant mix within centres and therefore are likely to have a higher propensity to spend.
'Extensions to established centres will account for around a quarter of new space and there is good logic behind that,' commented Justin Taylor, Cushman & Wakefield’s head of EMEA retail. 'The planning process is shorter, they have existing public transport solutions and a ready-made customer base to tap into – all of which reduces risk. As schemes get larger they can also attract more visitors and become regional destinations in their own right, which can bring additional benefits to the host city or town as well as the wider region.'
The report reveals the total stock of shopping centre space in Europe was 159.4 million m2 at the start of this year, with two thirds of that in Western Europe (108.6 million m2) and the rest (50.8 million m2) in Central and Eastern Europe (CEE). According to Cushman & Wakefield, this overall total represents a modest year-on-year increase of 4.5 million m2 during 2016.
'Many occupiers are likely to use and fit-out space in the future in a different way. Customers will be attracted to brands where the internal physical environment offers the opportunity to meet, shop, work, rest and play,' Taylor added.
Russia most active market
Despite the cancellation of several projects, Russia was Europe’s most active development market, adding more floorspace (863,000 m2) in the second half of the year than Poland, France and Turkey – the next three countries by completions – combined (748,000 m2).
Looking ahead, the amount of new space set to be delivered in the next two years is estimated to be 6.8 million m2. Since the global financial crisis, Western Europe has lagged behind CEE in terms of new space added and while that will remain true in 2017, Cushman & Wakefield expects the former to re-emerge as the best-performing region in 2018.
'Shopping centre owners are responding to shoppers’ wishes to augment their physical shopping experience with a social or leisure experience,' said Taylor. 'Development activity is increasingly focusing on new formats with a strong food and beverage presence as well as leisure and entertainment operators to increase footfall, dwell time and spend.'
