Colliers predicts five-year shopping centre development drought
There will be little “significant” new shopping centre development across the UK for four to five years despite “encouraging noises”, reports Colliers International.
The latest Shopping Centre Development Pipeline from Colliers International reveals that despite there being just over 34.2m sq ft of new shopping centre floorspace in the pipeline, only 1.4m sq ft is under construction – the majority of which has Land Securities at the helm.
The developer is behind the UK’s largest live construction project, the £350m Trinity Leeds scheme, which is scheduled to open in spring 2013, providing 1m sq ft of retail and leisure.
In 2011, 2.45m sq ft of shopping centre floorspace completed.
However, the total development pipeline has fallen by only 256,200 sq ft since October 2010.
Colliers said the drop of 0.7% is the lowest annual decline in the total shopping centre development pipeline in over five years and is the result of an increase in the amount of floorspace being added to the pipeline by way of new retail proposals or previously mothballed developments re-entering the fray.
Colliers reports that it is clear that it will be “many years before these schemes actually come to fruition, if at all”.
In total, only 4% of the shopping centre pipeline is classified as ‘under construction’. The majority (53%) of new schemes are at the permission stage and a further 43% are yet to apply for or secure planning consent, meaning they are some way off execution.
Sarah Banfield, associate director, research & forecasting at Colliers International, commented: “Despite developers’ insistence that schemes are going ahead, in reality much of this floorspace is effectively still on hold until the finances can be agreed and, even where funding is in place, in many instances there is now the issue of expired planning consents and CPOs to overcome and the need to redesign proposals before schemes can get underway. Therefore we predict that there will be little new development of any great significance for at least four or five years.”
Greg Styles, head of retail development at Colliers International added: “The development projects that are likely to remain deliverable are those situated in a prime location in major towns and cities that have an undersupply of quality floorspace, a sizable shopper population and where the land is in control of the developer, together with convenience food store anchored schemes in smaller towns.
“We expect that many proposals, particularly those in medium-sized towns, will fall out of the pipeline as developers recognise that they are no longer feasible and the amount of shopping centre floorspace that will actually be built will be much lower than the current total pipeline figure.”