ICSC, PropertyEU research reveals hidden potential in European shopping centre landscape

The European shopping centre industry offers substantial potential for refurbishment and redevelopment of mid-sized schemes, according to a new survey conducted by ICSC in conjunction with PropertyEU for the third edition of the European Retail Atlas.

The research, covering 66 million m2 of shopping centre space across Europe, found that the majority of schemes built prior to 2000 has so far attracted little capital investment. Moreover, a large group of schemes aged 15 years or older has no plans for a revamp, the survey found.

‘The European retail environment has become increasingly polarised in recent years between destination centres and convenience schemes,’ said Judi Seebus, Editor in Chief of PropertyEU and Managing Editor of the European Retail Atlas. ‘But many medium-sized centres remain highly relevant to their catchment areas and enjoy a monopolistic position, with low competition from other types of centres. As consumers regain confidence, debt availability improves and investors refocus on risk-adjusted returns, we foresee growing interest from asset managers and institutional investors eager to tap into the attractive opportunities in the middle ground.’

‘The ICSC/PropertyEU survey shows that more retail property owners can exploit the opportunity,’ added Mike Morrissey, Executive Vice President ICSC. ‘There is a great deal of hidden potential for unleashing value through asset management strategies.’

In total, some 6.7 mln m2 of new retail space was added to the European shopping centre landscape between 2013 and 2015, the survey found. Of this figure, 355,000 m2 involved extensions while 1.9 mln m2 involved redevelopments and refurbishments. Eastern Europe (including Russia and Turkey) accounted for the bulk of the new openings, or 4.6 mln m2. This amounts to 68% of the total.

By contrast, Western Europe accounted for the majority – or 81% - of the extensions, redevelopments and refurbishments. Just over 12 mln m2 is currently under construction or in the pipeline.

Moscow and Stockholm
The biggest new shopping centre to be completed in 2015 was the Columbus Shopping Centre in Moscow developed by MIRS, with a GLA of 136,000 m2. In Western Europe, the biggest new scheme to open its doors was Unibail-Rodamco’s Mall of Scandinavia in Stockholm, offering a GLA of 101,000 m2.

Besides new shopping centres that were completed or under construction between 2013 and 2015, the third edition of the European Retail Atlas covers existing malls that were extended, refurbished or redeveloped during this period.

The survey was sent to ICSC members and the resultant overview was supplemented by projects from PropertyEU’s own database. The data collected this year will be added to the online European Retail Atlas database of existing schemes, recently opened shopping centres and pipeline projects.

‘The industry will continue to face challenges in this era of fast-paced change,’ Morrissey said. ‘But greater transparency will shed light on opportunities where others see only problems. We view this new edition of the European Retail Atlas and the contributions of our content partners in that light.’

The 2015 edition of the European Retail Atlas is available to all delegates at the ICSC Retail Strategy & Trends Forum in Berlin this week (26-27 November) as well as to PropertyEU readers.