Retailers are increasingly focusing on new or significantly refurbished UK shopping centres, with these schemes accounting for nearly two thirds (63%) of leasing transactions in the 12 months to June, according to a new report from Cushman & Wakefield.
The report UK Shopping Centres – Dead or Alive analyses over 350 leasing deals undertaken by Cushman & Wakefield over the year to June and provides a unique insight into the current state of the sector, as well as highlighting the future trends impacting on shoppers, retailers and landlords.
Evidence shows that investment in the quality of shopping environment, the customer experience and brands is leading to a corresponding rise in sales and leasing activity. Crucially, it also means enhanced rents for the best schemes, as they become more important to retailers who are increasingly selective about store openings.
Over the same period, international retailers accounted for nearly 30% of leasing deals, with retailers including Estée Lauder, Typo, L’Oréal, Smiggle, House, Inditex and H&M among those actively expanding. It is also worth noting that cosmetics and lifestyle/sports retailers accounted for 8.2% and 4% of deals respectively.
The trend towards more flexible and shorter leases is also continuing, with an analysis of leases signed over the year to June showing an average length of 6.2 years. Landlords are increasingly embracing flexible leasing strategies, both to incubate new brands and to create opportunities to drive growth.
Toby Sykes, Head of Shopping Centre Leasing at Cushman & Wakefield, said: “We are seeing fundamental changes in the UK shopping centre market, driven by retailers’ focus on better quality schemes. While some retailers are reducing store networks, there is also a move to larger units in prime locations which serve as flagship stores and a showcase for brands.
“The quality of the shopper experience is critical to the success of any retail destination and landlords must adapt by creating spaces where customers can fully engage with brands and move seamlessly from in-store to online. In future, tills may disappear and robots may take on more repetitive in-store tasks, but well-trained and helpful staff are best-placed to offer expertise. Real people will remain at the heart of helping the customer to enjoy the experience and the brand.”
Darren Yates, Head of EMEA Retail Research & Insight, Cushman & Wakefield, said: “Traditional anchor stores, such as the large department operators, are consolidating both in terms of size and number of outlets, while the international multi-brands are seeking more space.
“It’s also true that parts of the shopping centre sector remain challenged and the shakeout of weaker schemes will continue. While this will lead to the repositioning or redevelopment of some shopping centres, it will also give rise to regeneration opportunities. However, we do not see this as a negative trend – more as part of the ongoing evolution of retailing and the continuous renewal of our urban landscape.”