Not surprisingly, shopping centre development in Europe plummeted by 30%, to a 27-year low in 2010. This much has been confirmed by new research from property consultants Cushman and Wakefield, but things are looking up … or are they…?
In cities throughout Europe the skeletons of would-be retail paradises have stood testament to the economic downturn for the past year with no visible sign of completion work, but there are stirrings once again and the same report predicts 6.9million new square feet of Gross Leasable Area by the end of 2011.
You may be asking quite where all this is likely to be. I for one have been speculating that the optimism of some Central European cities has both been responsible for a disproportionate amount of the recent growth in GLA and left the developers concerned with the high risk of un-let retail space. In cities like Prague the profusion of new malls that retailers’ traditional policy has compelled them to take occupation in, has left some retailers competing with their own stores only metres away from each other, but retailers are being forced to face reality and my guess is we’ll see them rationalising their estate at a cost to centre owners and managers. I know of one new centre that has all but closed down after a couple of years of trading, simply because of this.
2011’s new square-footage looks like being further East in places like Turkey and Russia which are expected to account for as much of 40% of total European growth. In the West, we are far more reserved. Even though our variety of retailers in each sector is significantly higher than counties in CEE there’s a limit to how many coffee shops you can cram into one centre, a reality that is underlined by the modest 2.5million of new square-footage we’ll account for this year.
Europe is clearly dividing into two retail zones. The easy short-term money looks like being in the East while retailers in Western markets have to get in shape for the battle to secure revenue. Either way, there’s a challenge for retail marketers.