An upturn in shopping centre development in Europe is on the horizon, according to a report from Cushman & Wakefield. Although development has been subdued in some countries for the past few years, improving retailer demand and concerns about potential shortages of prime space are contributing to expectations of a rise in development activity in many European countries.
An upturn in shopping centre development in Europe is on the horizon, according to a report from Cushman & Wakefield. Although development has been subdued in some countries for the past few years, improving retailer demand and concerns about potential shortages of prime space are contributing to expectations of a rise in development activity in many European countries.
'With retailers being in a cautious expansion mood and new supply being severely limited, the market also seems more predictable. The fall in turnover back in 2009 has turned out to be much smaller than anticipated and the development in 2010 and this year has been positive or at least stable. This has clearly supported investor appetite this year,' said Alexander Rafajloviè, head of Research at C&W Czech Republic and Slovakia.
More than 2.1 million m2 of new shopping centre space in Europe was completed in the first half of 2011, roughly equal to that of the same period in 2010. A total of 71 new shopping centres accounted for 90% of this space, while extensions of existing schemes made up the remaining 10%.
If all the projects scheduled are finished on time, the development total for 2011 will be with 6.8 million m2, 26% higher than that of last year. As with previous years, Central and Eastern Europe accounted for the majority (58%) of new space opened in the first half of 2011 with strong development levels in Russia, Turkey and Poland.
Some 5.8 million m2 of shopping centre space across Europe is scheduled for completion in 2012, although this figure will depend on occupier demand and the pace of economic recovery.
Russia and Turkey account for over 40% of the European shopping centre pipeline for 2012. In Russia alone, floorspace is expected to increase by nearly 3 million m2, according to figures from Cushman & Wakefield. More than 400,000 m2 is under construction in Moscow, with the remainder of the pipeline focussed on major cities including Krasnodar and St Petersburg.
In Turkey, nearly 1.4 million m2 of space is due to open in H2 2011/2012. Istanbul accounts for 60% of this figure, with more than 800,000 m2 under construction including nine schemes where GLA exceeds 40,000 m2. Provision in Ankara is also expected to increase considerably, with nearly 140,000 m2 in the pipeline. In addition, large shopping centres are being built in other major cities including Kayseri, Diyarbakir and Manisa.
In Western Europe, France and Italy continue to top the pipeline ‘league table’. France is expected to see a dramatic rebound in completions in 2012/12 after last year's slowdown. Indeed, the projected 2011 development total of 416,000 m2 is more than double the 207,000 m2 added to the market in 2010. However, activity remains focused on small schemes and extensions.
Completions in Italy are also expected to increase: the projected 2011 development total is 22% higher than last year’s figure, although there was a spate of delays in recent months. Similarly, while Spain’s 2012 pipeline, remains healthy, several projects have recently been postponed or put on hold, and there is some uncertainty about completion dates.
The Czech Republic is one of 10 European countries where no new shopping centres were opened in the first half of this year. The same situation occurred in Hungary, Austria, and Bulgaria, for instance. As a result, the year 2011 in the Czech Republic will clearly be the year of retail park development. 'There will be approximately 60,000 m2 of retail parks built by the end of the year,' added Rafajloviè.
