- 4.5 million sqm of new space expected in 2017; a further 2.3m sqm due in 2018
- Paris, Marseilles, Helsinki, Madrid, London have strongest pipelines in Western Europe while Istanbul, Moscow, Ankara, Warsaw and Tallinn lead way in CEE
- Developers chase the right footfall and spend with emphasis on leisure offer
Extensions to established shopping centres will be a significant driver of new floorspace across Europe in the next two years, according to Cushman & Wakefield’s latest European Shopping Centre Development Report.
Landlords 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.
The report reveals the total stock of shopping centre space in Europe was 159.4 million sqm at the start of this year. Western Europe accounts for 108.6m sqm while 50.8m sqm is in Central and Eastern Europe (CEE). This overall total represents a modest year-on-year increase of 4.5m sqm during 2016. Despite the cancellation of several projects Russia was Europe’s most active development market, adding more floorspace (863,000 sqm) in the second half of the year than Poland, France and Turkey – the next three countries by completions – combined (748,000 sqm).
Looking ahead, the amount of new space set to be delivered in the next two years is estimated to be 6.8m sqm. Since the Global Financial Crisis Western Europe has lagged behind Central and Eastern Europe (CEE) in terms of new space added and while that will remain true in 2017, Cushman & Wakefield expects the former to reemerge as the best-performing region in 2018.
Justin Taylor, Cushman & Wakefield’s Head of EMEA Retail, said: “Shopping centre owners are responding to shoppers’ wishes to augment their physical shopping experience with a social or leisure experience. 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. 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.
“Extensions to established centres will account for around a quarter of new space and there is good logic behind that. 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.”
France, the most active shopping centre development market in Western Europe in 2016, also has the strongest development pipeline in Western Europe. More than 931,000 sqm of new space is scheduled to be delivered to the market in 2017-2018, of which approximately 56% is in the key regional cities of Paris, Marseille, Lille and Lyon.
In the UK, Brexit, rising inflation, limited wage growth and relatively high household debt are all expected to weigh on consumer confidence and retail sales growth in the short term, although the development pipeline for 2017-18 is still strong, reflecting earlier commitments by developers. A total of 438,000 sqm of new space is currently under construction and due to be delivered in this period. This is the second strongest development pipeline in 2017-18 after France. Beyond 2017-18, the UK development pipeline will be helped by supportive measures from local authorities, which are becoming more proactive and enabling the development of new shopping centres, including the acquisition of assets.
On a city basis Paris, Marseille, Helsinki, Madrid and London are the top 5 Western European development markets.