Major shopping centres continue to attract large numbers of visitors with this high footfall ensuring future expansion potential. These larger retail destinations remain able to attract investor funds, as illustrated by the ongoing developments in Watford, Croydon, Guildford and Brent Cross.
However, it’s been a tough year so far for the retail world, with bad news for notable players such as New Look, M&S and Homebase. House of Fraser and Debenhams have issued profit warnings in 2018, and Toys R Us and Maplin are the latest high street victims, alongside food & beverage outlets Prezzo, Frankie & Benny’s and Jamie’s Italian.
...It’s been a tough year so far for the retail world...
The retailers’ current struggle to compete is mirrored by that of the retail property market. Increased political uncertainty and the rise of online shopping have led to reduced footfall in the smaller centres. At the same time, development land opportunities are becoming more scarce and subject to onerous planning constraints. Outside of the major centres, new retail developments are difficult to justify and both shopping centre and high street owners are looking at refurbishment or extensions as the best way to add value to their assets.
These extensions can act as a catalyst for the prevailing placemaking agenda, offering potential for adjoining residential and leisure provision.
Future predictions are for whole-day shopping centre destinations, with diverse leisure amenities such as theatres, aquariums and health spas, and increased food & beverage amenities – it’s estimated that these leisure and dining offerings will comprise 40 to 50 per cent of the total mix1. We can expect to see growth in the independent food & beverage sector, and also in the ‘looks like independent’ quality food & beverage chains.
On the tenant mix front, developers are rethinking the types of stores that consumers will respond to. Anchor tenants that drive traffic are still much sought-after, but there’s a new emphasis on a curated mix of smaller stores. Temporary, flexible spaces that can accommodate pop-up stores and showroom spaces are also part of the picture.
Getting the right space configuration is complex and developers may want to opt for maximum flexibility, to future-proof as much as possible in anticipation of constantly changing trends. Technology is now integral to the shopping centre experience, from parking apps to click & collect facilities. The most innovative shopping centres are increasingly acting like individual retailers, reaching out to their customers with customised offers and targeted advertisements based on real-time intelligence and location-based marketing2.
Here in Wales and the South West, we have a number of major destinations to rival the national big names, such as St David’s 2 in Cardiff, and Cabot Circus and The Mall at Cribbs Causeway in Bristol. There have also been some notable developments completed in the last few years, including Friars Walk in Newport, and, further afield, the Westgate shopping centre in Oxford. Both schemes were in the pipeline for decades before being given the go-ahead by their funders in 2013/14, although neither has achieved its full letting potential, illustrating a common concern for investors.
Understandable caution is evident in the market. In September 2017, The Crown Estate and its partner TH Real Estate cancelled plans to extend Princesshay shopping centre in Exeter, citing “market conditions”.
Like the rest of the UK (outside of the major destinations), it’s likely that our region’s retail market will now focus on extension and refurbishment. There are a number of major retail-led developments on the drawing boards in the region, though they need to secure planning and funding. Bristol Alliance, for example, a partnership between Hammerson and AXA Real Estate Investors, has prepared plans for the redevelopment of the Broadmead shopping district in Bristol.
Also in Bristol, M&G Real Estate hopes to proceed with its proposed expansion of the out-of-town Mall at Cribbs Causeway. The plans promise a new retail and leisure quarter, events and community spaces, and homes. Enhanced infrastructure will include a new bus station connected to the extended MetroBus link, and improved pedestrian and cycle routes, sustainably connected with neighbouring communities and the Cribbs Patchway new neighbourhood.
Rivington Land has been appointed by Swansea Council to redevelop the city centre, including 200,000 sq ft of retail and leisure, 3,500-seat arena, hotel, apartments and student accommodation. Phase two will see new shops, restaurants, cafes and a boutique cinema introduced on the former St David’s shopping centre site.
It’s no longer enough to deliver retail in relative isolation. Retail as an element – often the lead element – of mixed- use is becoming the norm, offering attractive, integrated communities in which to live, work and shop.
The placemaking agenda is evident in these schemes. It’s no longer enough to deliver retail in relative isolation. Retail as an element – often the lead element – of mixed- use is becoming the norm, offering attractive, integrated communities in which to live, work and shop. These mixed-use developments can be in town centres or out of town, and can act as a focal point for regeneration in both locations.
For developers, there are understandable frustrations in the current market. If local authorities want retail development to unlock wider economic opportunity, as seems to be the case, some streamlining of planning processes is needed, alongside certainty of cost.
The construction industry can also help developers by offering the latest technologies, such as modular construction and IT infrastructures, to achieve greater cost certainty, improved programme delivery and better whole lifecycle costs.
Faithful+Gould is well placed to help clients deliver sizeable retail opportunities, as well as modest refurbishment and extension projects. We do so via our project management, commercial management, asset management and retail delivery services.
1 Strutt & Parker; 2 McKinsey