Central and Eastern Europe (CEE) continues to dominate shopping center development activity last year, accounting for roughly 70% (2.4 million sq m) of all space added to the market in H2 2013, according to Cushman & Wakefield's latest European Shopping Center Development report. Car
In all, 3.6 million sq m of new shopping center gross leasable area (GLA) was supplied to the market in the second half of 2013, indicating a significant uptick in development across Europe. This is more than double the amount of space finished in H1 2013, while the total figure was lower than expected due to a number of projects' opening dates being postponed until 2014.
According to James Chapman, the head of Cushman & Wakefield's Central European capital markets division, "The appetite for shopping center investment is returning to pre-crisis levels, and new opportunities have arisen as a result of recent development activity. Many of Central Europe's biggest cities have reached saturation point, with the exception of Warsaw, where there is still room for additional large-scale shopping. Most other top-tier cities are focusing on repositioning existing centers to boost performance, while the opening of numerous new centers in smaller towns with populations of 100,000 or more has heightened competitiveness and attracted investor attention."
As of 1 January 2014, total European shopping center floorspace was estimated to be at 154 million sq m of GLA. With 17.3 million sq m of GLA, France is the largest market by shopping center space, followed by the UK in second place with 16.93 million sq m and Russia in third place with floorspace already topping 16.86 million sq m. By the end of this year, Russia is anticipated to overtake the UK as the second largest market.
If the majority of its pending projects come to reality, Russia might challenge for the title of largest European shopping center market. In 2014 and 2015, around 2.6 million square meters of shopping center space will be supplied in Russia, including Avia Park (235,000 square meters), which will be Europe's largest shopping mall. In the second half of 2013, Russia accounted for 29% of all new shopping mall space (1 million sq m) in Europe. The initial phases of Aero Park City (91,000 square meters), Kristall (75,000 square meters), and Planeta (63,440 square meters) have opened their doors in Russia.
Meanwhile, Turkey is set to benefit from Europe's second-largest pipeline, which is planned to be completed by the end of 2015 and will cover over 2.2 million square meters. France is first among Western European countries in terms of the pipeline, and third globally, with about 1.3 million sq m of retail space set to be delivered in 2014 and 2015, including various additions to existing schemes.
Turkey came in second place once again, with 486,800 square meters of retail center space provided in the six months leading up to December 2013, with the largest opening, Zorlu (60,000 square meters), taking place in the fourth quarter of the year. However, the Ukraine made a new appearance in the top three, adding around 340,800 sq m in H2 2013. Poland and France rounded out the top five, with 340,700 square meters and 291,300 square meters delivered in the second half of last year, respectively.
Cushman & Wakefield's senior investment analyst, Martin Mahmuti, says, "With two-thirds of all anticipated European space to be finished in 2014 and 2015 - 6.8 million sq m and 4.2 million sq m, respectively - CEE is forecast to remain a development hotspot. However, geopolitical concerns in Eastern Europe may disrupt the development pipeline for 2015, causing several projects to be postponed until next year."
In 2014, a total of 203 new retail complexes are scheduled to open across Europe, with 127 of them set to open in Central and Eastern Europe. 65 of the 86 extensions set to open will be in Western Europe. In 2015, 103 new projects and 32 expansions will open. Ukraine, Turkey, and Russia will continue to drive growth across the continent, with all three countries seeing double-digit increases in total floorspace.