The rate that shopping centres are being built has dropped to levels that were last seen during the early 1990s, according to research conducted by CB Richard Ellis. With levels stuck in a time warp, this will not only reduce opportunities for retails to expand, but will also affect the construction industry that build and design these commercial properties.
The researched found that shopping centre development has plunged to less than a quarter of the levels that were recorded in 2007, just before the economic crisis came into force. The decline in completions could be due to the length of time and cost it takes to obtain planning permission, compared to the 1990s. In cash stricken times, developers cannot afford to compensate the cost of holding the land whilst planning permission is sought.
Mark Disney, Shopping Centre Development and Leasing Director at CB Richard Ellis said, “Retailer demand is increasingly focused on larger shopping centres, but the lack of new development is limiting opportunities. We are seeing strong demand for new space in schemes such as Westfield Stratford, but demand is also strong for space in established major shopping centres like Bluewater, Meadowhall, and the Trafford Centre.”
However, it is not just the United Kingdom’s shopping centres that are struggling. Europe has seen a drop of 50 per cent in new openings in 2010 compared to 2009. However forecasts for 2011 indicate a 3.9 per cent increase in total completed shopping centres, which would be the smallest annual increase for almost 30 years. Mike Rodda, Head of Cross Border Retail Investment at Cushman and Wakefield stated, “Judging by the transaction pipeline, we expect to see a significant increase in the number of deals closed as we approach the year-end. Investor demand for good quality assets in core markets remains strong, albeit always with an eye on the strength of the occupational sector.”
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