According to Jones Lang LaSalle's new report Shopping Centre Development Boom or Bust? 2008 was a record year for development growth with the focus on medium-sized schemes in secondary towns and cities. Over 300 shopping centers were completed, accounting for 7.9 million m² of space, with Russia once again being the most active market, accounting for 13% of new space delivered. Turkey also experienced another strong year with nearly 1 million m² completed. As in 2007, Central & Eastern Europe (CEE) dominated with 55% of completions, and there are still several large schemes under construction.
Neville Moss, Head of EMEA Retail Research, commented: "2008 was a record year for new space delivered, but given the current financial climate it is inevitable that the pace of development will slow over the next two years and a substantial amount of planned space is expected to be delayed. However, this is not unusual in 2008 the actual amount of space that opened was 5.5 million m² lower than the 2007 prediction of 13.7 million m². Most new developments are currently taking place in Turkey, Italy and Russia and much of the proposed space for 2009 is already under construction, and it is doubtful that they will be stalled."
2010 will however be less active and it is anticipated that a significant proportion of the proposed 11.3 million m² pipeline will be put on hold if economic prospects continue to deteriorate. Corrections to the development pipeline will be absorbed mostly by those markets that have grown considerably over the past three years, notably Russia and Turkey. However, it is also clear that significant opportunities for developers and investors still exist across the continent due to the huge diversity of stock per capita.
James Dolphin, Head of pan-European Retail Agency, concluded: "Retailer demand will have an amplified impact on development over the next two years and while brands are still looking for opportunities, it has become harder for lease contracts to be agreed as retailers look to minimize risk by searching for the most favourable deals. In CEE a number of schemes have already opened with high vacancy rates, and there is evidence of retailers withdrawing from projects, delaying market entry and reducing expansion plans. Developers who have scheduled new schemes to open over the next two years will let consumer and retailer demand shape decisions on whether to delay or start construction."
Source: Jones Lang LaSalle