The largest decline in the number of new shopping centers in 27 years

According to a report by Cushman & Wakefield, there was a sharp decline in the number of new shopping centers in Europe in 2010 - the biggest since 1983.
  • Russia and Turkey remain at the forefront of the countries with the highest number of new projects being prepared for 2011-2012 
  • In Western Europe, most new buildings are planned in Italy and France 
  • Stratford City shopping center in London is the largest facility currently being built in Europe (176,500 sq m) 
According to a report by Cushman & Wakefield, there was a sharp decline in the number of new shopping centers in Europe in 2010 - the biggest since 1983. Last year, approximately 5.2 million sq m of surface was finished, which is 30% less than the year before. This is the second consecutive year of decline in supply of new space in shopping centers. 
 
It is expected, however, that in 2011, development activity will increase in most markets. By the end of this year, creation of 6.9 million square meters of new surface is expected. The situation in the markets is still uncertain in many European countries - the implementation of future projects is dependent on economic growth, retail sales and tenant demand. If all facilities are completed on time, the total supply of new space in the current year will exceed last year's by 33%. 
 
 Investment in shopping centers in Europe in the 1980-2011 period 
 
In 2010, 165 new shopping centers were opened in Europe. The combined resources of gross leasable area (GLA) in shopping centers in Europe are more than 131.9 million square meters. As in previous years, most of the new space was opened in Central and Eastern Europe (63%). The largest facility completed last year was the 144,300 sq m shopping center City-Park Grad in Voronezh, which is currently the largest shopping mall in Russia, not to mention Moscow. Russia recorded the highest increase in the activity of all studied markets, this country accounted one quarter of new space in 2010. 
 
In many markets in Central and Eastern Europe, the volume of retail space has clearly increased, especially in Bulgaria, where seven new facilities were opened, which represents an increase on an annual basis by 139%. In Western Europe, most of the new space on the market was created in Italy and Spain. In 2010, there was 15 new shopping centers opened in Italy, and 4 objects have been developed. However, in Spain, 7 new projects and 3 expansions were completed. The decline in development activity has affected Germany, Portugal and France. 
 
Russia and Turkey are still at the forefront of European countries in terms of the number of new projects being prepared. More than 40% of all facilities in Europe to be created in 2011-2012 are planned in those countries. Further significant increase in development activity in this year on both these markets is expected. By the end of 2012 in Russia, more than 3 million square meters GLA will be created, while in Turkey, the supply of new space will increase by nearly 1.8 million square meters. 
 
Charles Slater, a partner and director of Cushman & Wakefield office space said: "In 2010, the two most important cities in Russia has opened only two world-class facilities: Vegas in Moscow (130,000 sq m GLA) and Galeria in St. Petersburg (93,000 sq m GLA).  It is expected that there will be the number of commercial projects completed in 2011 in Russia, which were launched or planned before the crisis and have been halted during the downturn. Tenants are increasingly interested in modern retail space, which will also affect the growth of new investments in this, still underdeveloped, market. 
 
There was increased investment activity in all sectors in 2010. The value of investment transactions in commercial real estate in Europe was 38.5 billion Euros, an increase of 72% compared to 2009 In all European countries, the surface yields in the best shopping centers underwent further compression, the highest recorded in Russia, where the end of the year yields were 10%. In 2011, the activity in the investment market in Europe will increase slightly and yields are to remain rather stable or to slightly decrease. Retail market share in the total value of investments in commercial real estate increased from 30% in 2009 to 33%, which reflects the growing popularity of this asset class. 
 
Mike Rodda, head of cross-border investments in the commercial real estate at Cushman & Wakefield, said: "Some time ago we predicted a strong recovery in Russia and Turkey. Currently, these forecasts come true. The situation on leasing markets has improved and access to finance has become easier, especially in Turkey, which fills developers with more optimism. In addition to improving liquidity, the interest of investors is growing from month to month." 
 
Katarzyna Michnikowska, Senior Analyst in vValuation & Advisory Services division of Cushman & Wakefield in Poland, said: "The forecasted for the year 2011 level of supply of shopping centers in Poland (400.000-450.000 sq m GLA) will increase compared to 2010. This reflects the continuing high interest in retailers, developers and investors in the Polish market. New investments occur primarily in medium-sized cities (100.000-200.000 inhabitants), which are relatively low saturated modern commercial areas, while presenting a relatively high purchasing power. The share of the expansion of existing facilities in the total volume of supply is increasing, which is the safe alternative for financial institutions to the new location yet unproven."

 

Download PDF

0.0
Tags:
Be the first to comment
mantra