Shopping centre group Intu recently announced that it had identified space for 5,000 new-build homes and 600 hotel rooms that could be constructed alongside its centres as it grapples with the problem of what to do with its masses of space as its retail tenants endure tough times.
This comes alongside news from the US that Wal-mart is to build what it calls ‘town centres’ on its extra car parking space at a number of its massive stores. These will involve it filling these areas with the likes of restaurants, driving ranges, bowling alleys and curated local food vendors that complement its superstores’ proposition.
It is clear that around the world the issue of what to do with a problem like physical retail is moving beyond people putting their heads in the sand to actual solutions being tabled. It is absolutely the case that creative thinking needs to be applied to the problem.
One positive sign is that at least the construction of new space has finally slowed down. Over the last 20 years Europe has seen on average 5.4 million sq m of new shopping centre space built each year but for 2018 and 2019 a lesser 3.5 million sq m will be completed each year, according to Cushman & Wakefield. There has been an 11% year-on-year fall in space under construction in the first half of 2018 in Europe while Western Europe has declined by 25% year-on-year.
The real estate firm also revealed that a third of Europe’s shopping centre space was built more than 20 years ago and therefore in mature markets like the UK it represents a significant opportunity for redevelopment. It will be interesting to see what such redevelopments involve. Again we have to be talking about something creative and more radical rather than simply more of the same old retail alongside a bit of food & beverage and leisure.
There is no doubt that these are challenging times for the real estate industry dealing with shopping centre developments but what might come out of the other end are creations that are much more suited to what consumers want today and what they will demand in the future.
Glynn Davis, editor of Retail Insider
K3 Retail partners with businesses to provide connected technologies based on Microsoft Dynamics 365 so retailers can reach their goals now and in the future. In a size that best fits future plans wherever you need it – Cloud, Hybrid or On-premise. Our solutions drive more than 800 international retail brands from Charles Tyrwhitt and The White Company to Ryman and Sue Ryder, Hobbycraft, Wasabi and Ted Baker, K3 Retail is a Microsoft Gold Certified Partner and the UK’s leading Microsoft Dynamics retail partner.