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Viewing report
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Shopping Centres Market Assessment 2008
Key Note Publications Ltd, Jan 2008, Pages: 112
Key Note estimates that, in 2007, the total amount of letting area within the UK shopping centre market reached 25 million square metres, up by 3.1% on 2006 and 15.6% higher than in 2003.
The shopping centre market has three main sectors: covered shopping centres, which incorporate in-town and out-of-town schemes; retail parks; and factory- and designer-outlet centres.
The companies that operate in, manage and own shopping centres come from a variety of sectors, including property development, investment trusts, finance houses, development and management companies, and specialist operators. Some of these companies operate in just one sector of the market, whereas others operate in two and several of the larger finance houses invest in all three market sectors.
The largest sector of the market is covered shopping centres. There are numerous in-town shopping centre developments (which are favoured by the planning authorities) and many new schemes continue to open. The phased development, extension and redevelopment of existing town-centre shopping centres is also a permanent feature of the market, and this is ongoing. The market for out-of-town shopping centres is subject to planning restrictions, which have limited the development of this area. However, despite this, a number of the leading out-of-town centres have undergone, and continue to undergo, major refurbishments, and most of the leading out-of-town centres continue to attract up to 30 million visitors a year.
The amount of letting area in UK retail parks has increased steadily since 2003. New centres have opened and many of the existing centres have been extended or redeveloped. The market continues to benefit from strong demand from retailers for space in the larger retail parks and from high occupancy levels. Investment by property companies and property developers is strong, and the sale, purchase and realignment of their retail park portfolios are ongoing.
Factory- and designer-outlet centres are a relatively recent addition to the UK retail market and it was not until 1993 that the first of these opened. Among the main attractions of these outlets are the permanent discounts — of up to 70% — on leading international branded items. These centres also offer a wide variety of additional attractions — such as restaurants, public houses, museums and other leisure facilities — to increase their appeal to shoppers. However, the development of this sector is also restricted by the same planning regulations that limit the development of the out-of-town shopping centres and only a small number of new centres are being developed.
The UK is one of the leading EU countries in terms of shopping centre space, and interest from institutions and property companies remains strong for further developments. High occupancy rates and high retail rents in the leading centres are helping to sustain investor interest and support the development of new major centres.
The shopping centres market is currently experiencing a significant increase in supply and the volume of shopping centre space currently under construction is at its highest level since the building boom of the late 1980s. As such, Key Note forecasts that a significant amount of additional shopping centre retail space will be added to the market between 2008 and 2012, with 2008 being the peak year for completions. All sectors of the market will benefit from this expansion, although some sectors are viewed as having more growth potential than others.
Countries Covered: United Kingdom
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