The scale of development in the UK and the rest of Europe is polarising. With a handful of plans for mega schemes in the pipeline, and other boutique and niche projects being pushed forward, Mark Faithfull considers whether the middle ground has been squeezed out.
Despite the swathe of shopping centres up and down the country, the truly huge projects barely break into double figures. That rarity value was evident in the run-up to the opening of Westfield Stratford City, which attracted wall-to-wall consumer coverage last September.
There is limited scope for a new, massive shopping centre in the UK – other than, it would seem, Croydon, where Westfield is planning a third London centre – but advice from beyond the UK suggests that for landmark shopping centres to retain their appeal, the big need to get bigger. Guillaume Poitrinal, chief executive of Europe’s largest retail property company Unibail-Rodamco, cites the Asian and American approach of building mega schemes. He believes that such a strategy has been lacking in Europe and predicts that building or extending centres at that ‘mega’ level is now the way forward. “The focus should be on dominant, huge schemes mixing retail and leisure,” he says. “If we believe we can’t leverage the scale of a centre then we will sell.”
Echoing that sentiment, Westfield head of operations Bill Giouroukos reflects that the experience of developing two huge malls in London has begun to reshape the Westfield business. He says this was behind its decision to sell its smaller Nottingham scheme while exploring opportunities for another major mall, this time in south London. It is also embarking on a Milan project, which is on a Stratford scale.
The bigger picture
This direction pulls together a number of clear trends. Consumers are increasingly drawn to large regional shopping centres where they can visit the best of the best, and where resulting footfall enables the retailers to put their best foot forward, presenting flagship stores. In addition, much non-core retail features in these huge projects – including more restaurants and, notably, leisure – often on a grand scale. Spanish mega-scheme Puerto Venecia will open in Zaragoza later this year with more than 226,050 sq ft of leisure incorporated into the 2.2 million sq ft site, which includes a shopping mall, big box retail and a retail park.
Backed by developer Eurofunds – a joint venture between British Land and Orion Capital Managers – investor Ian Stanford believes that future developments will have to be destinations: “It’s not just about being big, you need lots of different leisure and it needs to be in the right environment, not simply inside a big box. It has to be an experience for the whole family,” he says.
Some of the UK’s benchmark projects have extended their offer. Bluewater in Kent added a major venue space in October. Bluewater venue director Rebecca Cardozo says owner Lend Lease feels many visitors “see Bluewater as an experience and as a town centre in its own right and so adding cultural and commercial events to that brings more to the destination”.
She adds: “If you consider your site as more than simply shopping, then widening the leisure offer is an obvious extension. In our case, we felt from our research that there was a desire from our local catchment of Kent to attend things which perhaps they wouldn’t want to travel all the way into London for. The important thing is that those attending the events can then use the restaurants, or go shopping, which brings advantages to the retail tenants.”
But there are only so many Bluewaters and Trafford Centres. One of the few openings this year is the boutique, mixed-use Brewery Square in Dorchester. Owner Resolution Property has sent out a call for more suitable UK sites it can buy and develop but has struggled to spend its money. Partner Nigel Robson admits: “The UK has been a frustrating market. We have £800m of leverage to place, but very little stock has come to market. The banks have decided to hold on to most of their real estate assets and we don’t get the impression that will change, or that the assets will be released any more quickly.”
Brewery Square is planned to open by October 2012. It’s a high-end, mixed-use scheme with a strong food and beverage offer, which includes almost 200,000 sq ft of retail. Pre-lets include Zizzi, Pizza Express, Wagamama, Café Rouge, Odeon Cinemas, Premier Inn and fashion retailer Hobbs.
“Much smaller scale development is where the principal opportunity lies now,” says Justin Taylor, UK chief executive of Cushman & Wakefield retail and leisure. “There are unlikely to be many more 750,000 sq ft and above projects and those cities where there is space for new provision, like Sheffield, Preston and Portsmouth are more likely to proceed with smaller schemes with perhaps one department store, less retail and less risk.”
Quality over quantity
Instead, Taylor believes that most expansion will come through food-led small schemes and niche offers such as the Tesco project in West Bromwich. This involves regeneration of more than 570,000 sq ft of the town centre, with the creation of a 144,240 sq ft Tesco Extra, a cinema, shops and restaurants. “What we are likely to see is more 10-store sized projects in quality market towns and affluent catchments,” he says. The exception, he adds, is central and Greater London where there are more opportunities such as the extension of Westfield London, Croydon and the Brent Cross regeneration. London mayor Boris Johnson, however, has warned the latter may be impossible to get off the ground because of a shortage of development finance.
After more than a decade of unprecedented shopping centre growth, the upshot is that the UK has probably seen the end of a continuous pipeline of mid-sized schemes and even large scale malls, other than extensions to the existing super-centres. Instead, new space will come from small, location-specific projects serving urban customers and backed by risk-averse finance.
The big approach…
- Westfield Stratford City, London Plenty has been written about Stratford City, which has an imposing, 24-hour lifestyle street as the central spine to the development, linking department store anchor John Lewis at one end with Marks & Spencer at the other. The street is flanked on the northern side by a three-storey shopping centre, playing host to independent operators and fresh food specialists in modern, boutique-style shops contrasting with two distinct building styles on the south side, housing fashion stores and a host of edgy urban brands. It is home to about 300 shops, 70 food and beverage outlets, a 17-screen, all-digital, state-of-the-art Vue cinema, boutique 14-lane, ten-pin bowling offer All Star Lanes, a casino and fresh food market The Great Eastern Market
- Trinity Leeds, Leeds Trinity Leeds is due to open in spring 2013 and the 1 million sq ft scheme will add more than 120 retail units ranging from 100 to 100,000 sq ft. With Cult, River Island, Hollister, H&M, Topshop, Mango and Primark already signed, Trinity Leeds will also provide a key leisure draw with a 40,000 sq ft Everyman Cinema and a range of restaurants including Carluccio’s, Yo! Sushi, Giraffe and Handmade Burger Co. Of the Everyman cinema, Land Securities development marketing manager for retail Claire Reynolds says: “We have run a Facebook campaign with Everyman called ‘2.8 Days Later’ to get students to storyboard and shoot a film in 2.8 days. There will be a viewing for the finalists at the centre and the winner will have their film shown as a trailer at Everyman cinemas.”
… and The niche approach
- Sanderson Arcade, Morpeth, Northumberland Morpeth was a successful market town but piecemeal development had broken up its retail offer. However, an ageing arcade offered potential and Mark Dransfield, managing director of Dransfield Developments was determined to exploit Morpeth’s lack of stores above 1,000 sq ft. “Every destination needs an anchor and we were able to do a deal with Marks & Spencer to relocate from its constrained Simply Food store to a larger, full offer unit in the centre. That helped us to attract other national retailers,” he says. The 27-store Sanderson Arcade was inspired by London’s Burlington Arcade, with high-quality architecture, dark mahogany store fronts, sophisticated signage and retention of the 1920s façade
- Boxpark, Shoreditch, London Boxpark founder Roger Wade scored a coup when he attracted Carphone Warehouse boss Charles Dunstone as an investor ahead of the December launch of his pop-up mall, which will be open for a maximum of five years. He has alsosigned a deal with Dutch developer Corio to look at potential sites in Europe. The first site is a 4.7ha former goods yard next to Shoreditch High Street station, on a site owned by real estate developers Hammerson and Ballymore Group. Planning issues and economic realities meant a spot already derelict for 40 years faced at least another five years without being developed. Wade’s mall of refitted shipping containers has created low-cost, low-risk ‘box shops’, put together as a mix of fashion labels and lifestyle brands, galleries and cafes. He plans more boxparks in west London and major UK cities
Elsewhere in Europe
The big approach…
- Emporia shopping centre, Malmö, Sweden The €358m (£300m) Emporia in Malmö, Sweden will offer a total commercial area of 839,612 sq ft across 220 stores and is being described by its developer – Steen & Strøm – as “unique of its kind”. Pre-lets include a 26,911 sq ft H&M and Max Hamburgare, ICA, Axfood, Lindex, Kappahl and Clas Ohlson. Situated to the southeast of Malmö, and close to Denmark, Emporia is an integral part of a huge urban development project that includes the shopping centre, residential units and office space
- Puerto Venecia, Zaragoza Spanish mega scheme Puerto Venecia will open in Zaragoza late this year with more than 226,050 sq ft of leisure incorporated into the 2.2 million sq ft site, which includes a shopping mall, big-box retail and a retail park. The anchor stores include El Corte Inglés, Hipercor, Decathlon, Primark, Zara and Desigual, plus a 46,286 sq ft Cinesa cinema. The scheme includes a sailing lake, ice rink for the winter, a multi-purpose sports area, major leisure sites and 71,044 sq ft of food and beverage outlets, while the site will include a climbing wall, zip-line, rowing boats, a standing wave and rope courses. Backed by developer Eurofunds, which is a joint venture between British Land and Orion Capital Managers, it is now developing a similar project in Valencia
… and The niche approach
- Abatan 2020, Brussels, Belgium A traditional market by a Brussels abattoir. Construction has started on a new market hall in a €24m (£20.1m) scheme, which will mix new restaurants, gourmet food stalls and retail, plus new residential units. The first stage of the Abatan 2020 project will open towards the end of 2013. Merchants will be relocated into the Halle Alimentaire and a number of new food-based tenants will join them in an upscale repositioning and urban regeneration project
- MOOD, Stockholm Swedish institutional investor AMF Fastigheter has put the emphasis on place-making and sustainability for its 113,025 sq ft, 60-unit inner city MOOD development in Stockholm, says AMF’s head of retail Karolin Forsling. “MOOD is not a mall, it’s more a place – a city within the city,” she explains. Set to open in March, the scheme is sandwiched between one of the city’s principal business districts and its main retail offer and has attracted brands such as Armani Jeans, Barbour, Gant, Hugo Boss, Paul Smith and Polo Ralph Lauren. However, the first pre-lettings were to three of Stockholm’s top restaurants, one for each of the project’s levels