In 2002, the UK had 20.8 million square metres of letting area in shopping centres, with the most successful centres attracting over 30 million visitors a year.

In 2002, the UK had 20.8 million square metres of letting area in shopping centres, with the most successful centres attracting over 30 million visitors a year. Companies involved in the shopping centre market continue to report retail properties as the highest-yield properties on their books. The future stability and growth within the market will depend on the ability of these organisations to continue to develop existing and new space into the type of mall the consumer demands.

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In 2002, the UK had 20.8 million square metres of letting area in shopping centres, with the most successful centres attracting over 30 million visitors a year. These shopping centres can be seen in the guise of traditional in-town shopping centres, more elaborate and normally larger regional and out-of-town shopping centres, open air retail parks and, increasingly, designer and factory outlet centres.

Although out-of-town developments are well established, the smaller town-centre shopping centres represent much of the retail space within the shopping centres market, in terms of letting space. In consumer research exclusive to this report, over half of respondents said they regularly visited in-town shopping centres.

The factory and designer outlet sector accounts for the smallest letting space, yet is growing as fast as the development pipeline will allow. The pipeline for out-of-town centres is drying up: planning restrictions tend to more readily assist in-town rather than out-of-town developments.

The key ingredients of a successful shopping centre are a good layout, easy and safe parking, strong management, flexible leasing and a balanced mix of well-known and niche retailers actively trading. This applies whether the centre is in or out of town, with parking at out-of-town sites taking on an added importance.

The UK consumer maintains a confident outlook. Since September 2001, there has been considerable uncertainty and some instability in global economies. This has been witnessed in financial markets worldwide and, to a lesser extent, also in the world's consumer markets. However, the downturn in consumer activity experienced in other major global economies (such as the US, Germany and Japan) has yet to bite hard in the UK. More people are in work, average earnings are up and credit remains cheap. Consequently, consumer confidence has remained high, and this is helping to sustain developments in the shopping centre market.

The market itself is one that must develop with a view to the long term. Development pipelines are long: new shopping centres cannot be planned, built and populated overnight. For this reason, many of the companies active in the property market as a whole are also active in the shopping centre market. Whole units tend to change hands during or even after completion as property management companies look to juggle their property portfolios in a fashion that best fits their longer-term forecasts.

Across Europe, retail rents continue to outperform office and other commercial rents, again reinforcing the strength of the consumer shopping market. Location is the key for retailers, with prime locations generating a higher return for land owners. Everyone wants to be where the main customers are. When times get hard, consumers turn their backs on secondary locations and the importance of occupying the prime location becomes clear. A number of firms located in secondary locations in Germany are already finding this out the hard way.

Companies involved in the shopping centre market continue to report retail properties as the highest-yield properties on their books. As property and capital redevelopment is central to the market, it is not surprising that many of the firms active in the market carry some large values of fixed assets in their balance sheet. The future stability and growth within the market will depend on the ability of these organisations to continue to develop existing and new space into the type of mall the consumer demands.

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REPORT DATA SUMMARY:

Shopping Centres Market Assessment 2003

Category: Retail

URL: www.researchandmarkets.com/reports/36335

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