More than 75m sq ft of planned shopping centre development in Europe has been put on hold or cancelled as a result of the credit crunch, says Cushman & Wakefield.
In its European Shopping Centre Development report published today it said that it expects around 107m sq ft of new shopping centre space to open across Europe in 2009 – 40% less than forecast in July 2008. An even lower amount of around 75m sq ft is now expected to open in 2010 and Cushman said this would represent the slowest rate of expansion since 2005 and would bring an end to five consecutive years of growth in shopping centre development.
The downbeat prediction follows 2008 which was a record year for shopping centres openings in Europe, with more than 96m sq ft of new shopping centre space opening in 310 schemes. Russia led the way with more than 17m sq ft of new retail space opening followed by Turkey, the UK, Spain and Romania.
However, expectations for 2009 and 2010 have been sharply reduced as the combination of the financial crisis and global recession has resulted in weaker consumer sentiment, tougher financing requirements, and reduced developer confidence.
Cushman said that in particular, emerging markets like Russia, Ukraine, and to a lesser extent Turkey, will all be notably impacted. Around 12 months ago these three countries accounted for 58% of the total development pipeline, this has now fallen to just 22%.
Alexander Colpaert, a consultant in Cushman & Wakefield’s European research group, said: ‘The slowdown in development activity is not necessarily a negative trend for many of the emerging countries in Europe as some areas, in particular the capital cites, have seen an enormous amount of shopping centre space added in a very short space of time. This environment therefore gives developers, retailers and local governments the time to assess the current situation and, for example, to examine how well-provided certain cities now are and what the impact would be of further large scale schemes on the current retail landscape. Moreover, the pause will give existing schemes a chance to bed down and establish themselves in the local retail hierarchy.’