Shopping centre completions across Europe in 2018 plunged by around 28% year-on-year to a 24-year low.
Around 28m sq ft of new shopping centre space across the continent was completed during 2018, according to the latest research from Cushman & Wakefield.
This reflected the lowest level of completions for 24 years, and sat on a par with volumes recorded in the early 1990s, when the first traditional shopping centres in Central and Eastern Europe were opening.
In Western Europe, the amount of completed new shopping centre space fell by 23% year-on-year, while there was a 31% decline in Central Europe.
Despite the drop in new developments, the total size of the European market has inched up by 1.6% year-on-year, totalling 1.8bn sq ft at the start of 2019.
Overall, Turkey, Russia, Poland and France added the most shopping centre floorspace in 2018.
How the UK fared
During 2018, the UK ranked as the third most active market for shopping centre development in Western Europe, behind France and Finland.
The UK delivered 1.6m sq ft of new shopping centre space, up 8% on the previous year.
This was mainly boosted by two launches: the £600m extension at Westfield London and the £180m expansion at intu Watford.
Extensions represented 95% of all new space opened during the year, with leisure extensions, mixed-use developments and the redevelopment of vacant city centre sites as the core areas of focus.
Looking ahead
Across Europe, around 70m sq ft is forecast to be completed in the next two years, 42m sq ft of which is slated for 2019.
In 2019 and 2020, 22.6m sq ft of new shopping centre space is expected to open across Western Europe. This marks a 7.4% drop on the amount of space under construction in the region at the start of 2018.
On the other hand, Central and Eastern European cities will add 47.3m sq ft of shopping centre floorspace, reflecting a 0.5% rise on the previous year.
Completed schemes to look forward to in the coming years include the Edinburgh St James development in Scotland, expected to launch in 2020, the redevelopment of the Mall of the Netherlands near the Hague and the new Mall of Tripla in Helsinki, Finland.
In the UK, the pipeline for shopping centre developments for 2019 and 2020 currently falls short of 3m sq ft.
C&W said in the report: “In the UK, there is a clear oversupply of retail space. In city centres, occupier demand tends to focus on prime schemes, while older secondary schemes are generally seen as surplus to requirements, notably those which are comparison-led.
“While there have been few closures so far, these schemes appear to be the most vulnerable going forward.”
In Central and Eastern Europe, Turkey outperformed the rest of the region after launching 5.6m sq ft of new shopping centre space.
However, the amount of new supply in the country fell by nearly 50% year-on-year.
Total shopping centre floorspace across the Central and Eastern European market stood at 628.6m sq ft at the start of 2019, with Turkey, Russia and Poland accounting for nearly 50% of new openings in Europe.
Adapt or die
With shopping centre markets reaching maturity in most European countries, the gap between successful prime schemes and struggling secondary sites will continue to widen.
Silvia Jodlowski, senior research analyst at C&W, said: “Landlords and investors will need to adapt to the polarisation of the shopping centre market. We do not expect to see much further shopping centre development in the traditional sense.
“In its place, we anticipate a growing number of redevelopments and reconfiguration projects to cater for the growing demand for flexible space.
“Mixed-used schemes are quickly becoming more and more popular as investors realise the true potential they hold.
“As we see in parts of Europe, with France being a prime example, shopping centre developers are trying to diversify, with new formats such as retail parks and hybrid formats including offices, hotels and residential.”
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