- An estimated 1.5 million sq ft of shopping centre floorspace is in the development pipeline for 2018, almost of all of which will be extensions to existing schemes
- Compares to half of the 1.3 million sq ft of space delivered in 2017
- New development embraces the leisure ‘experience’ economy
- Continued trend of investment by local authorities accounting for 11% of total shopping centre investment in 2017
Development activity at some of the UK’s best-known shopping centres is expected to add an additional 1.5 million sq ft of retail and leisure floorspace in 2018, according to Cushman & Wakefield.
Extensions to Westfield London, Intu Watford and Intu Lakeside are scheduled to complete this year, while the long-awaited extension at Brent Cross is set to begin, along with the redevelopment of Intu Broadmarsh in Nottingham.
Proprietary data in Cushman & Wakefield’s report, UK Shopping Centres – The Development Story, reveals a total of 1.3 million sq ft of additional shopping centre floorspace was delivered in 2017. Whilst this was significantly below the long-term average annual trend rate the UK did see the openings of two new major schemes in Oxford and Bracknell.
The report also identifies some key trends in the shopping centre market. These include:
- The growth in leisure ‘experiences’ as landlords explored new ways to entice shoppers increasing their experience-led leisure floorspace, including formats such the Junk Yard crazy golf concept at Westgate Oxford. Demand from traditional leisure operators has also continued, with food and beverage brands accounting for almost 15% of shopping centre leasing activity.
- The increasing involvement of local authorities. Local authorities accounted for more than 10% of total shopping centre investment in 2017, compared with just 0.45% in 2012 (based on an analysis of figures from Property Data). Access to relatively cheap finance through the Public Works Lending Board has enabled local authorities to acquire income-generating assets, in addition to enabling strategic control of town centre development. This trend is expected to continue to grow despite a few warning shots from the Treasury.
- A trend towards more flexible and shorter leases has also continued. An analysis of leases signed over the year showed an average length of seven years. This offers flexibility to retailers and landlords alike, enabling the latter to attract and maintain a relevant tenant mix.
John Percy, Head of Retail Development Consultancy at Cushman & Wakefield, said: “Leisure is a current focus but we expect much more varied mix of uses being part of all development and this will be critical to creating successful places. Landlords are quickly adapting to market trends and engaging with an increasing number of ‘experience’ led operators in order to entice shoppers offline and into their developments.
“Activity at some of the UK’s best known shopping centres, including Westfield London, Brent Cross and Intu Lakeside make this an extremely interesting year in development terms.”
Amy Gibson, Senior Research Analyst at Cushman & Wakefield, said: “There are a number of exciting shopping centre developments planned for 2018, almost all of which involve extensions or refurbishments of existing schemes. This is an indication of the continued commitment from landlords to evolve schemes in line with global trends.”