Shopping centre development at 30 year low
For the first time in almost 30 years, 2012 will be the first year to see no major shopping centres open in the UK, according to research commissioned by the British Council for Shopping Centres and retail property specialists Lunson Mitchenall.
The BCSC/Lunson Mitchenall 2012 Shopping Centre Development Pipeline found that no new shopping centres will open their doors to consumers at any stage during 2012, although the shopping centre pipeline will pick up in 2013.
Developers and investors were found to be remaining extremely cautious as the lack of development funding continues to block construction activity alongside an all-time low in consumer confidence. The total current estimated shopping centre development pipeline is 29.4 million sq ft, which has dropped from a peak of 75 million sq ft at the height of the development cycle in 2007.
The research revealed that developers are requiring between 50% and 75% of pre-let retail space before starting on site. The BCSC said this was a clear indication of a continued lack of finance with speculative development becoming increasingly rare.
Never Miss a Retail Update!It also found that retailer requirements have changed with an increased demand for bigger, better but fewer units in larger towns and cities. However, the severe lack of new space has resulted in a significantly limited choice for retailers forcing them to choose units in out-of-town retail parks or expand internationally in order to grow. This has added further pressure to the UK’s struggling high streets and smaller towns, said the BCSC.
Marcus Kilby, managing director, Lunson Mitchenall commented: “Although the pipeline for new shopping centres will pick up, the fact that 2012 will see no new openings is a stark indicator of how the retail market is evolving and responding to the economic crisis.
“Consumers still want to spend. This is indicated by strong internet sales and growing retailers are the ones embracing this evolution. However, there is still widespread recognition that shops must remain at the heart of the supply chain. The missing part of the jigsaw is that retailer requirements for these shops aren’t being met by the current stock and this is disappointing and troubling for UK retail.”
Edward Cooke, th BCSC’s director of policy and public affairs, said the government needed to push forward with a commitment to Tax Increment Finance to help open up the development pipeline and support the changing UK retail landscape. He added: “It is only with the full support of government providing the necessary stimuli and infrastructure – both financial and physical – that our town centres will experience much needed regeneration.”
