C&W: Delays to hinder expected upturn in European shopping center development (EU)

C&W: Delays to hinder expected upturn in European shopping center development (EU) Friday 28 September 2012
According to the latest European Shopping Centre Development Report released by Cushman & Wakefield today, “Whilst this year’s projected volume of new shopping centre completions at 6.9 million m² exceeds the 2011 total, a more cautious mood has clearly taken hold among occupiers and developers and delays have been reported in countries including Italy, France, Portugal, the Czech Republic and Romania. As a result, the actual volume of space delivered could well fall short of projections."
Of the 71 new shopping centers opening in H1 2012, 53 were in Central & Eastern Europe and 18 in Western Europe. The largest center delivered in H1 was Oz mall in Krasnodar, Russia (169,000 m²). The largest centers delivered in Western Europe were Boulevard Berlin (64,000 m²), Gran Plaza 2, Madrid (60,000 m²) Conca d’Oro in Palermo, Italy (55,000 m²) and Confluence in Lyon, France (52,000 m²) Russia tops the European ranking in terms of both pipeline and H1 completions. Approximately 725,000 m² of new space was completed in Russia in H1, taking total floorspace to 15.4 million m². Russia accounts for more than one fifth of the European pipeline with a further 2.1 million m² of new space scheduled for completion in H2 2012/13, which will boost floorspace by 13% and lift Russia ahead of the UK to become the second largest shopping center market in Europe after France. More than 250,000 m² of new shopping center space opened in Turkey in H1 (if factory outlets are included, the figure increases to an estimated 350,000 m²) with a further 1.6 million sq. m under construction, accounting for 16% of the total European pipeline. If all of the schemes in the pipeline are completed on schedule, shopping center provision in Turkey will increase by 25% between 1 July 2012 and 31 December 2013. More than 800,000 m² of new space is scheduled for completion in Istanbul alone by the end of 2013 Poland saw the completion of nine new centers and five extensions totalling 235,000 sq m in H1. While no new shopping centers were completed in the capital, the Warsaw metropolitan area should see a boost in provision in 2012/13. In Western Europe, France and Italy continue to top the pipeline ranking. However further delays have been reported in Italy, including several schemes that have been put back until next year; the projected 2012 completion total has been revised from over 400,000 m² to the current figure of 284,000 m². In Spain Puerto Venecia in Zaragoza accounts for nearly 30% of the pipeline while in the UK, completions will reach an historic low this year before moderately picking up again in 2013; schemes in the pipeline include Land Securities’ Trinity Leeds (75,900 m²) Justin Taylor, UK CEO Retail & Leisure said: “The programme of shopping center openings and pipeline across Europe is positive compared to 2011 with the particular focus on schemes coming forward being in central and eastern Europe and Turkey being one of the stand out markets. Developers do however remain cautious with access to capital for some being more difficult. For many markets, the occupier profile is positive as many of the leading brands continue to internationalise and look to expand into major cities across Europe.” Investment activity slowed in H1 2012. Nearly €12 billion of retail assets were transacted across Europe, compared with €19 billion in the previous six months and €21 billion in the first half of 2011. Retail accounted for 21% of commercial property investment , a decline on both the previous six months (28%) and the corresponding period of 2011 (36%). The UK and Germany continued to dominate although activity has slowed considerably in both markets. Mike Rodda, Partner and head of EMEA Retail Investment, Cushman &Wakefield said: “On average in European Retail Investment accounts for around 30% of total investment volumes, this increased to around 40% during the early stages of the recovery, but recently this has fallen back, finance shortages have hit particularly hard especially for the larger transactions, however, demand for the best schemes is still good and the pipeline to the year end looks positive with some sizeable transactions expected.” Source: Cushman & Wakefield