Will another super regional shopping centre ever be built in the UK again? Opinion is divided.
The year is 2037, crowds have gathered and the mayor is proudly holding giant laser scissors poised to cut the red silk ribbon. Also on the podium is the foreign developer shaking hands with the smiling local planners, happy with the scheme they have worked on together.
It is a glorious day as the new 3m sq ft scheme - the first super regional shopping centre to be built in the UK since 1999 - is declared open after 10 years in development.
But is it fantasy or fact? Will today’s out-of-town mega-malls - generally regarded as schemes of 1.5m sq ft-plus - have company? Or will market fundamentals never again support the delivery of another giant retail destination?
Opinion is divided. The ayes to the right are Savills, Knight Frank, PwC and the Local Data Company. The nays to the left include Revo’s vice-president, Aviva Investors and Intu.
Those in the ‘yes’ camp cite population growth, retailer demand and ageing existing centres as the reasons why new mega-malls will one day need to be built. Those who disagree point to planning challenges and a glut of redundant retail floorspace and say existing shopping centres can be refurbished, renovated or extended.
The UK got its first super out-of-town regional centre in October 1986 when Metrocentre, Gateshead, opened. Now part of the Intu stable, the scheme comprises 4.3m sq ft and remains the largest shopping centre in Europe. Two more - Meadowhall in Sheffield and Lakeside in Thurrock, Essex - arrived in 1990, followed by Manchester’s Trafford Centre and Cribbs Causeway, Bristol, in 1998. Bluewater in Kent was the last to be built in 1999.
Planning permission for these behemoths stemmed from national government policy in place from the late 1970s to mid-1990s that focused on delivering strategic regeneration projects through enterprise zones to replace old, disused industrial and manufacturing areas.
It soon became apparent, however, that these super centres were having an enormous detrimental impact on local town centres. So in 1996, National Planning Policy Guidance 6 was published to provide a ‘town centre first’ approach, an ideology that remains today. As a result, the UK hasn’t seen another large out-of-town centre since the 18-year-old Bluewater.
For Mark Simms, head of shopping centre leasing at Savills, and his colleague Matthew Sobic, this and a number of other factors suggest that the UK will see another super centre - possibly several - by 2042.
They cite Office for National Statistics figures predicting that the UK’s population will grow by 14% (9.15 million people) over the next 25 years. Quoting Savills’ own research, they add that this growth would mean an additional non-food spend of around £34bn a year and an additional retail spend of around £50bn a year in today’s money.
“Additional non-food floorspace that could be supported by increases in retail spend will be around 50m sq ft to 75m sq ft,” says Simms. “This could accommodate five super regional centres.”
However, Simms and Sobic remain realists. “Do we think there are going to be five centres? I don’t think so: a lot of that floorspace will be incremental increases on retail parks and existing shopping centres and town-centre redevelopments,” says Sobic.
Others are more bullish about the prospect of new centres.
“Anyone who says nothing else is going to be built is kidding themselves. I’d be absolutely staggered if someone doesn’t build a new fantastic shopping centre at some point in the next 25 years,” says Charlie Barke, Knight Frank’s head of shopping centre and high-street investment. “I don’t think it will happen in the next five years, but there is certainly potential for more of these things.”
I’d be staggered if someone doesn’t build a new fantastic shopping centre in the next 25 years - Charlie Barke, Knight Frank
Barke points to the south/South East of the country, while Sobic and Simms name Leicestershire, the edge of Cambridgeshire and the Northamptonshire area as potential locations.
Matthew Hopkinson, sales and marketing director at the Local Data Company, believes a new centre could come to fruition in a decade. “When the centres we have now start to become tired, it will create an opportunity for the next generation of schemes,” he says.
However, he believes the location of any new scheme will be heavily influenced by transport hubs, meaning new development would be more likely to take place in town than out of town. Centres would be in locations such as Westfield’s London centres, he says, rather than “dumped out on the edge of a motorway”.
Mark Williams, principal at Hark and vice-president of Revo, is more sceptical. He believes town-centre-first policy will continue to prevail and points to capacity studies that he says are “so archaically out of date they pay little heed to the internet and the world we now live in”.
“We have too much retail floorspace from a capacity standpoint and so we should be looking to adapt and change [existing centres],” he elaborates. “Government policy is not going to be about granting consent for new schemes.”
Martin Breeden, development director at Intu, owner of three of the top six mega-malls, agrees that in the current planning climate, it is unlikely any regional shopping centre will get approval.
Others contend that the existing offer is sufficient. “There [isn’t] co-ordinated activity from [retailers] to push forward with development,” says Mark Burlton, former global executive, retail occupier, EMEA, at CBRE, and now managing director of new business Cross Border Retail. “The current provision is more than adequate.”
The focus is more likely to be on developing new outlet centres than new regional malls, believe some experts.
Who’s to say one of the big Dubai operators like Emaar or MAF wouldn’t develop it? - Mark Simms, Savills
However, if new regional malls do prove to be the preferred option, the question then is: who will deliver them?
Simms points to the usual suspects. “You would get Landsec, British Land and Hammerson having a crack. And Westfield would definitely throw its hat in the ring,” he says. Breeden, meanwhile, says Intu would “have a look at it”.
It is not just UK-based developers that would potentially be up for the challenge.
“Who’s to say one of the big Dubai operators like Emaar or MAF wouldn’t develop it?” says Simms. “A company like US-based Simon might consider this the last opportunity to get into the UK and do something fresh. You would also have the Europeans, like Unibail-Rodamco, which has often looked at the UK market.”
There is no doubt that developers would be keen should the market conditions be right and planning policies allow. Most agree, though, that in the immediate future, there is likely to be more focus on expanding existing out-of-town centres.
We are looking at more leisure, more mixed-use, a lot more technology and a lot more theatre - Tony Christie, Aviva Investors
Indeed, Bluewater is expanding its plaza area, work is due to start on Lakeside’s £71m leisure extension and Meadowhall had a 300,000 sq ft food and beverage extension approved last month.
As Tony Christie, head of retail at Aviva Investors, one of the UK’s biggest shopping centre investors, puts it: “What we are looking at is the reconfiguration and extension of the existing super locations to create more experiences for the customer - more leisure, more mixed-use, a lot more technology and a lot more theatre.”
Clearly in such a rapidly changing and evolving market, the mantra is ‘never say never’. Whether that applies to the super shopping centre remains to be seen.
11 October 2017
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