Destination Retail - shopping centres
Despite all the worries about the fate of the economy and the retail industry as a whole, there's an awful lot of money being ploughed into creating, acquiring or updating major shopping centres around the UK. As Hammerson's recent trading figures indicated, as a format for generating footfall even in these austere times it would appear that destination retailing proves there is safety in numbers.
In October of last year when Land Securities opened its One New Change shopping centre in the shadow of St Paul's Cathedral it was heralded by many as a tangible sign that the economic recovery was under way. Two years earlier when Westfield unveiled its magnificent edifice in London's White City it was a rare and dazzling piece of good news when the economy had very few others to offer.
This kind of thing happens a lot where retail developments of this nature are concerned: the sheer scale of most major shopping destinations and the costs involved in their opening or renovation means they are used as examples of wider economic trends or stories. Perhaps less emphasised but arguably more important, to a retail management audience at least, is that where billions of pounds are being invested into retail infrastructure (as they are in the UK's big shopping destinations) it's a pretty safe arena in which to develop one's career. The convenience, facilities and spectacle of the big shopping centres are a big draw for customers but, of course, all those stores in close proximity also mean managers have a host of potential new employers on their doorstep.
There's little question the destination retail format is booming and there's a lot of money changing hands. We're just months away from Westfield's second big London opening, Westfield Stratford City, a stone's throw from the 2012 Olympic stadium. Actually at 1.9 million sq ft, big doesn't seem quite adequate to describe the £1.45 billion East London development - which will become the largest urban shopping centre in Europe.
But it's not just the fellows from Westfield making waves. Over the last few years we have seen an almost unparalleled period of development, with the opening or regeneration of projects across the length and breadth of Great Britain; from Victoria Square in Belfast to the Victoria Quarter in Leeds, from Liverpool One to St David's in Cardiff, from Cabots Circus in Bristol to the ever-eye-catching Bullring in Birmingham...the list goes on and on. In January of this year we've also seen Capital Shopping Centres, owners of Lakeside in Thurrock, agree a £1.6 billion fee to acquire the resplendent Trafford Centre in Manchester. These are serious investments in the successful future of the retail industry.
And of course the reason all this money is going in is, again, due to the fact that as a format the big shopping centres are generating decent returns. Hammerson, for example, recently announced that its profits had jumped 11% over 2010, with underlying profits reaching £144.5 million - up from £130 million in 2009. Interestingly the company, whose portfolio includes the Bullring and Brent Cross centres, also stated that its occupancy levels had risen to 97.9% over the year. Inevitably this will stem from the cancellation or postponement of other new retail developments during the recession. But compare this occupancy level with the 85.5% average town centre retail occupancy rate as recorded in a survey by the Local Data Company last month.
This survey posed the question: "The very fact that 10 years ago the majority of a multiple retailer's stores were on a high street but now are migrating from the high street into shopping centres and out-of-town shopping parks begs the question of what will fill the high street of 2020 and beyond?" This is a difficult question to answer but what looks unlikely to change is the collective appeal and indisputable footfall of destination retail centres.