Thanks to a strong uplift in consumer confidence, the number of shopping centre developments in the UK has skyrocketed in recent years, with many developers choosing to capitalise on the expansion plans of numerous High Street retailers.
According to data released by DTZ, this trend is set to continue as there is currently 15.9 million square feet of new shopping centre plans in the pipeline in the years leading up to 2021, although this does include schemes that may not come to fruition.
The data shows that, in the years leading up to the end of 2018, the UK shopping centre development pipeline currently stands at 9.6 million square feet when schemes already under construction or with planning consent are taken into consideration. Of this amount, a total of 1.8 million square feet of new space is set to open by the end of this year across nine separate schemes – the largest is Westfield Bradford, where joint venture partners Westfield and Meter Bergman will introduce 570,000 square feet of new space to the Yorkshire city.
DTZ believes that a number of factors are contributing to this trend, with the largest being the increasing appetite of investors for large modern schemes. However, head of retail market analysis at the firm, Jonathan Rumsey, argues that the fortuitous consumer climate also plays a large role.
He says; “Retail sales as measured by the Office for National Statistics (ONS) have seen 27 months of consecutive year-on-year growth, the longest sustained period of growth since 2008.
“Low inflation, rising employment and real wage growth has led to increased consumer confidence while vacancy rates remain at their lowest since 2010 – a healthy 2 million square feet of development is due to come online the remainder of this year with a total 9.6 million to the end-year 2018.
“Occupationally, retailers are acting positively by making strategic occupational property direction decisions against a strong macroeconomic position, and this positivity has seen the list of retailers acquiring floorspace continue to grow, examples of this trend being new entrant Pep & Co. and Ikea.”
The research also found that investors are increasingly turning away from the “traditional” shopping centre format to favour more diverse mixed use schemes located in town or city centres.
Most of these developments place a heavy emphasis upon creating a wealth of leisure attractions and incorporate some residential units, often choosing to step back from the archetypal anchor unit format to amass a collection of medium sized units geared to drive footfall.
Head of retail development at DTZ, John Percy, believes this trend is a result of changing consumer habits, in particular the attitude towards omni-channel retailing.
He says; “The outlook for retail property development is improving as investor risk appetite moves outward and the size of the pipeline is testament to this.
“The trend, however, is for mixed used city schemes incorporating residential, retail and leisure, the latter being the more dominant and complimentary use in shopping centre projects.
“The argument as to retail anchors is an interesting one, particularly in the multi-channel age where arguably experience is more important than the broadest range.”
Do you think the traditional anchor unit will be phased out of future shopping centre developments?
