Development of new retail parks to increase 50% in 2016 compared to floorspace added in 2015. Nature of retailers changing as new entrants diversify from traditional high street locations. Development pipeline increasing across Europe, led by France, UK and Italy.
Increased retail park development across Europe is set to deliver 1.3 million sq m of new space to market by the end of the year, up 50% on 2015’s total, according to new research from Cushman & Wakefield. The firm’s European Retail Park Development Report reveals a further 1.1 million sq m of new retail park space is scheduled for delivery in 2017. This is also significantly more than the 863,000 sq m of space added across Europe in 2015.
If all the new space is delivered as planned it will take the total retail park floorspace in Europe from 37.3 million sq m at the start of 2016 to nearly 40 million sq m by the end of 2017. Of the potential 2.41 million sq m to be added, 2.06m is in Western Europe and 0.35m is in Central and Eastern Europe (CEE). As it was in 2015, the retail park pipeline for 2016/2017 is dominated by France which accounts for 54% of total new space in Western Europe, followed by the UK with 17%, Italy with 10%.
The top three in CEE are Russia, Poland, Czech Republic – although the pipeline of potential floorspace is considerably lower than in Western Europe. In CEE, rather than building standard retail parks, there is a growing trend for hybrid formats which combine big-box retail warehouses with traditional retailers, usually found on high streets or shopping centres. This results in narrowing the quality gap between traditional shopping centres and out of town retail.
Patrycja Dzikowska, Associate Director, Consulting & Research of Cushman & Wakefield in Poland, said: “The growth of the retail park sector is driven largely by growing developer interest in smaller towns. More than half of the 2016/2017 retail space supply will be delivered in smaller cities with less than 100,000 inhabitants. Retail park development is also spreading to towns with less than 50,000 inhabitants. Benefits of this retail format include lower construction costs and shorter delivery times, favourable rents and lower service charges.
"The main impetus of active development of retail parks in Ukraine is a combination of social, demographic and economic factors, the balance of supply and demand on the real estate market, as well as changes in consumer preferences. The economic feasibility of this kind of development in current market conditions in Ukraine is questionable since the main difference between the classic retail park and, for example, a district shopping center, lies in a low percent of shopping gallery - no more than 10-15% of the leased area as compared to 40-55% in the classic shopping center. At the same time projects where the development of a retail park is planned on the basis of already existing major anchor tenant have a lot of potential, "- says Yana Lytvynchuk, Deputy Managing Director of the company DTZ Ukraine.
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