Shopping Centre Massacre: Are 250 UK Centres Dead Or Dying?
As many as 70 shopping centres will need to be demolished, and another 200 will need serious redevelopment in part as residential, leisure or office floorspace.
Those are the conclusions being drawn from the latest data drop from the Local Data Company, whose figures show that as many as a third of the UK’s 700 malls are due for demolition or large-scale repurposing.
The firm calculates that more than 30 shopping centres in the UK are now at least half empty, with as many again nearing that point as vacancies account for almost half of the units. Half a dozen centres are almost entirely without tenants, the Guardian reported.
The vacancy data comes as Colliers released its latest forecasts of the MSCI index, suggesting that rents will continue to fall across all retail segments in 2021, except for supermarkets. Shopping Centres (down 11% year on year) are as badly hit as standard shops (down 12% year on year).
The firm notes that retail trends are being masked by the lack of comparable rents as turnover-based deals begin to predominate, and landlord incentives and lease extensions are agreed. Colliers does not say it, but it could easily be that the rental position is worse than it appears.
“This discrepancy makes forecasting the MSCI data more difficult than ever. Our forecasts are designed to predict the future MSCI index as an indicator of trends and turning points, rather than as a means of producing fixed rental levels,” Colliers’ Deputy Chief Economist Oliver Kolodseike said.
Opportunistic investors calculate the market is bottoming out. Last month U.S. investor Ardent exchanged contracts to buy the Touchwood shopping centre in Solihull in the West Midlands for £90M.
It has bought the 650K SF Touchwood centre from Lendlease Retail Partnership, a fund managed by Lendlease. The centre is anchored by the only John Lewis store in the region, Ardent said, and it includes the town’s sought-after Crescent Arcade. Tenancies at Touchwood also include brands such as Apple, H&M, Zara, Next and a Cineworld cinema.
