Shopping centre space increased at the slowest rate for 16 years and development is set to remain subdued over the next few years.
Five new schemes and six extensions opened in 2010, adding just over 227,000 sq m of new shopping centre space, down 8,000 sq m from 2009, according to a report from property adviser Cushman & Wakefield.
Development is set to continue at a restrained pace in 2011 according to the report, with a sharp slowdown predicted for 2012.
Cushman & Wakefield research analyst Kristina Gorkovskaya said rental levels should remain strong because of the limited new space.
She said: “Whilst current data shows that completions will come to a virtual standstill in 2012, demand for prime retail space remains resilient. The limited supply of new space coming onto the market should support prime rental levels going forward. Projects that were put on hold during the economic downturn may be resumed to meet demand for new space.”
Just over 260,000 sq m of new shopping centre space is scheduled to open in 2011, a 15% increase on 2010 levels. 176,500 sq m will be delivered as part of the Stratford City scheme in London, on which construction began prior to the economic downturn.
Other developments scheduled to open this year include the 46,500 sq m Trinity Walk in Wakefield and the 25,000 sq m Parkway in Newbury.
To date, only 53,000 sq m of new space is scheduled to open in 2012. With the exception of Land Securities’ Trinity Leeds, due in 2013, and the Tesco centre in West Bromwich, scheduled for next year, no major projects have begun construction in recent months.
Cushman & Wakefield said the lack of space coupled with strong demand could be a real opportunity for landlords.
As of January 2011, total shopping centre provision in the UK stands at nearly 16.2 million sq m across 695 schemes.
Investment activity picked up to the end of last year with 20 shopping centre transactions, totalling nearly £2.3bn, signed in the second half.