Total UK shopping centre stock rose at its slowest pace for 16 years in 2010, a new report has revealed today.
The study from property company Cushman & Wakefield shows that shopping centre space increased just 1.4 per cent last year, with five new schemes and six new extensions opened.
Over the course of this year around 260,000 sq m of centre space is due to be opened but 176,500 sq m of that is represented by the new Westfield Stratford development in the east of London, construction of which started before the recent recession.
Kristina Gorkovskaya, Research Analyst in Cushman & Wakefield’s European Research Group, said: “Whilst current data shows that completions will come to a virtual standstill in 2012, demand for prime retail space remains resilient.
“The limited supply of new space coming onto the market should support prime rental levels going forward. Work on Trinity Leeds restarted in August, and other projects that were put on hold during the economic downturn may be resumed to meet demand for new space.”
Along with Westfield Stratford, only two more centres are due to be unveiled this year; the 46,500 sq m Trinity Walk in Wakefield and the 25,000 sq m Parkway in Newbury. The only centre due to open in 2012 is the Tesco Centre in West Bromwich (53,000 sq m)
Land Securities’ Trinity Leeds project is the only major development in the pipeline after next year, so it seems landlords are going to be the biggest winners of the current environment with demand for retail space still so high.
Toby Sykes, Partner for Retail Services at Cushman & Wakefield, commented: “There is great potential in the current retail development market. The lack of supply of new retail space, coupled with strong demand from leading retailers, is a real opportunity for landlords.
“They must however, build to requirements and avoid oversupply. From our experience leasing Trinity Leeds for Land Securities at present, it is clear to us that there is considerable demand for the right development product.”
Investment activity remained high last year with more than 20 shopping centre transactions in the second half, totalling nearly £2.3 billion.
Yields remained stable across all shopping centre categories in the second six months of 2010, with prime regional yield ending the year at 5.5 per cent.