Shopping centre space under construction has fallen from almost 20 per cent of the overall retail pipeline at the onset of the credit crisis in 2007 to just 6 percent today. The overall shopping centre development pipeline is also starting to contract significantly - the total area of shopping centre space planned for construction fell by almost 10 per cent over the last six months.
The rapid growth of supermarkets being constructed, which began following the economic crisis in 2007, has continued to grow rapidly. This has increased the amount of non-food space operated by supermarkets and increased market-share at the expense of shopping centres and retail parks. Supermarket development in the UK has grown by 57 per cent since September 2007 and now accounts for 38 per cent of all shops in the development pipeline, up from 25 per cent four years ago.
Jonathan De Mello, head of retail consultancy, CBRE said: "This dearth of new development is causing increasing problems for store groups dependent upon speculative shopping centre development to meet their expansion targets. Opportunities for the big stores in particular look set to remain thin on the ground for a very lengthy time.
"This problem is exacerbated by the increasing amount of non-food space being added to the grocery mix - traditional trading locations are losing market share to supermarkets. The scale of market-share shift to date has already been huge and looks set to carry on growing - the longer the speculative development downturn lasts, the greater the market-share loss to grocers.
"However, while the shopping centre pipeline has all but dried up, this presents opportunities for savvy investors to focus on improving existing schemes, or buying schemes in areas that will see growth in population, affluence, or consumer spending going forwards. Proactive asset management has never been more important in the current climate, and the best investors are constantly looking to improve their schemes from a tenant mix, marketing and environmental perspective, in order to secure market share over the competition."
Article originally published July 2012
