Russia and Turkey head retail development pipeline

Russia and Turkey alongside Poland have recorded the strongest increases in newly opened retail space in recent years, according to the second International Council of Shopping Centers (ICSC)/PropertyEU survey of retail landlords across Europe.

Altogether in Europe, including Russia and Turkey, some 5 million m2 was added over the three-year period between 2012-2014, bringing the total of existing shopping centre space in the region, based on our survey, to 62.2 million m2.

This marks a 10% increase compared to last year’s total which covered the three-year period between 2011-2013. Turkey accounted for 19% – or 1 million m2 – of the shopping centre space delivered between 2012-2014. Russia and Poland accounted for around 9% - or just under 500,000 m2.

The survey results are included in the second European Retail Atlas launched by ICSC and PropertyEU at the ICSC Retail Strategy & Trends Forum in Milan on 27-28 November.

‘The European Retail Atlas aims to delineate more clearly the challenges and opportunities facing shopping centre developers and investors across Europe,’ noted Mike Morrissey, Executive Vice President of ICSC. ‘By focusing on the recently completed shopping centres and pipeline projects including redevelopments, refurbishments and extensions, we have created a new layer of information to our database of existing shopping centres in Europe.’

While the bulk of new pipeline projects is concentrated in Turkey, Russia and central and eastern Europe, it is the mature countries of western Europe that lead the ranking for planned refurbishment including redevelopments and extensions of existing malls, the survey found. The UK is well ahead in this category with 1.2 million m2. This is more than a fifth – or 21% – of the total 7.6 million m2 recorded for the whole of Europe. Germany and France rank second and third with 814,000 m2 and 714,000 m2 respectively.

‘The figures clearly indicate that the mature countries of western and southern Europe are entering into a new phase of the retail evolution as refurbishment becomes the new watchword,’ noted Petra Kooijman, Head of Research at PropertyEU. ‘Pipelines for new developments are decreasing in western Europe in particular, but the potential for refurbishment is enormous for both developers and investors.’

Food and beverage (F&B) is also playing a growing role in the overall layout of shopping centres in Europe, according to the survey. Western European countries lead overall, with Spain in the top position, according to the findings. While the share of F&B in terms of floor space in existing shopping centres amounted to 7% until 2000, over the following decade it grew to about 10%. It has since slipped slightly to 8% for existing centres and 9% for new developments.

‘It is common knowledge that a divide exists between east and west, that countries in central and eastern Europe, Russia and Turkey offer much more potential for new shopping centre development than the mature markets of western Europe,’ commented Sarah Banfield, Manager of International Research at ICSC. ‘But what we have also established this year is that the retail game is by no means over in the saturated countries in the west.’