7 ANALYSIS
Developers defer starting on site
The next two years will see the lowest level of shopping centre completions in 50 years, according to Colliers’ Midsummer Retail Report
A number of developers have said they are dusting off plans for shopping centre schemes, but Colliers sees this as a false dawn, and it forecasts that shopping centre openings will not begin to recover until the latter half of this decade. And according to Colliers’ Greg Styles many locations across the UK have reached saturation point in terms of the comparison between available consumer expenditure and retail floorspace, which means it will be many years before more new space is needed. Last year saw around 2.5m sq ft of space
completed, similar to 2009’s 2.8m sq ft, but massively reduced from the 2008 figure of 8.1m sq ft.
Looking ahead to this year, around 2.4m
sq ft is set to open, similar to the last two years and perhaps suggesting equilibrium is being reached. The figure is, however, very misleading as it is massively skewed by the opening of Westfield’s 1.6m-sq ft Stratford City development in September. There are only two other schemes of
note completing this year – in Wakefield and
Newbury. And Styles warns the landscape has
changed since the last economic cycle. “There is simply not enough retail demand to see some poorer schemes being viably redeveloped for pure retail use,” he says. And he warns: “This is only set to get worse as shopping patterns shift yet further with the continued growth of online retailing and the popularity of supermarkets and the out-of- town open A1 parks.” Styles forecasts this situation will remain
for 10 to 15 years at least, and perhaps forever, as retailing patterns shift inexorably to other channels. The result is that the shopping centre
development pipeline is likely to remain extremely modest for some years ahead. No new schemes of any real note are set to open in 2012 with the total under construction being only about 700,000 sq ft. And Colliers also predicts that 2013 will see less than 1m sq ft open. The major opening that year will be Land Securities’ Trinity development in Leeds, which CACI
predicts will catapult the city from seventh to fourth in the UK rankings. Styles says: “This is a good example of
the development projects that are likely to remain viable and in demand in the medium to long term – major cities and conurbations with an undersupply of quality floorspace, a huge population and a site in a prime location.” Looking further ahead, developer
predictions would imply that 2015 and beyond will see a return to the multimillion sq ft completion levels we have seen over the last decade. Indeed, there is no doubt that the first half of 2011 has seen a groundswell of news from developers about the schemes they are dusting off and taking forward again. Westfield and CSC are going head-to-
head in Nottingham. Hammerson has won planning consent for Eastgate Quarters in Leeds and has received financial support from the local authority to revive Sevenstone in Sheffield. And north of the border, Henderson continues with its plans to redevelop the St James shopping centre in Edinburgh, albeit with delays to its original programme. But Colliers concudes: “Despite these
signs of positive movement, we believe the reality is that many developers’ predictions for 2015 and beyond are wildly optimistic. All but the very strongest of schemes in the pipeline require a UK economy that is growing strongly to ensure good retail demand, strong rentals, reasonable incentive levels and the availability of good finance. “With the well documented public sector job cuts and cost saving measures, these attributes are unlikely to come together in most medium sized and smaller towns for some time.”
Find out more: For more information, please contact the author
graham.parker@
jldmedia.com
www.shopping-centre.co.uk July 2011 SHOPPING CENTRE
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