FEATURES Table 5-2 Neighborhood Shopping Centers (Including Supermarkets)
2013 Building Cost Per Square Meter in Local Currency
Australia Canada China
Germany India
Ireland Japan
Malaysia Russia
Singapore
South Africa South Korea
A$ C$
CNY EUR INR EUR Y
MYR RUB S$
ZAR KRW
United Arab Emirates AED United Kingdom United States Vietnam
Source: Turner & Townsend In Canada, building costs per sq m run from C$1,900
to C$2,500 in 2013. Costs are high in some regions due to high levels of natural resource-related construction. Retail availability in North America as a whole is
shrinking. Urban retail development is growing as fewer suburban markets expand.
Western Europe Retail construction costs in Western Europe—including
the United Kingdom, Germany and The Netherlands— increased between 1% and 3% in 2012 and is forecast to escalate between 0% and 2% in 2013. Construction costs have been flat or even falling in
some regions, due to low demand, extremely tight tendering conditions and low-input cost increases. This situation is likely to continue until consumer confidence and the Western European economies recover enough to spur new construction. Case in point: Ireland. In both 2011 and 2012, building
costs per sq m declined for neighborhood and large shopping centers. Moderate growth (+2%) in construction expenses is expected for 2013. Moreover, a first-quarter 2013 decrease in GDP—the third in the row for the nation—demonstrated that the fragile economy had lapsed back into recession. Such events maintain the
INTERNATIONAL COUNCIL OF SHOPPING CENTERS 22 3
GBP US$
1,800-2,000 Year-Over-Year Percent
Change (calculated from midpoints of building cost ranges)
2011 0.0%
1,900-2,300 -1.0 3,800-5,000 1,900-2,300
24,000-30,000
3.1 3.0 7.0
1,900-2,300 -6.0
270,000-310,000 -2.0 3,600-3,800
28,000-32,000 2,000-2,200 7,000-9,000
3.0 5.0 4.0 2.0
900,000-1,000,000 -5.0 6,000-7,500 -6.0 1,900-2,200
0.0 1,100-1,600 -7.0 VND 10,000,000-13,000,000 11.0
2012 1.0% 1.5 1.6 2.9 8.0
-1.0 -1.0 5.5 6.0 3.0 3.0 2.0
-2.0 2.0 3.0
11.0
2013 2.0% 1.0 5.0 2.4
13.0 2.0 1.0 3.0 5.0 3.0 9.0 3.0 2.5 1.0 2.0 7.0
downward pressure on hourly-labor costs already among the lowest in the 16 countries tracked in Table 5-3, and decrease the likelihood of significant building-expense increases going forward. Ireland, though particularly dire, is just one instance of
how Western Europe is still struggling with recessionary conditions. Austerity policies, high unemployment and weak economic growth have battered consumer confidence and spending, especially in the Mediterranean countries. Total consumer spending has decreased with shoppers forgoing big-ticket items and even groceries. Traditional retail is also affected by increasing levels of online shopping. Retail-sector investment is low in Western Europe,
partly reflecting the maturity of the shopping-center market in the region, but mostly due to the weak economy and the lack of available finance to fund new projects. Nevertheless, development has not completely dried up, with some large projects recently completed in Spain, France and Italy. Construction costs for large shopping centers occupied
a relatively similar spectrum in Ireland and Germany (€2,100-€2,300 for the former, €2,000-€2,400 for the latter), with neighborhood-center construction expenses between €1,900 and €2,300 in both cases. (See Table 5- 2.)
RETAIL PROPERTY INSIGHTS VOL. 20, NO. 2, 2013
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