New construction
opportunities are emerging from the growing surplus of retail space being left
empty or obsolete as consumers increasingly switch to online shopping.
A recent report from
the think tank, Centre
for Cities, argues that too many urban centres across England and Wales are
over-dependent on retail and need to swap shops for offices, housing and public
space to improve their economic prospects.
It notes that in the
centre of struggling cities such as Blackpool and Newport, retail space
accounts for twice as much space as offices. By contrast, successful city
centres such as Cambridge and Exeter have more than three times more office
space than retail.
Rather than rely on
retail, the report calls for action to create a better environment for firms in
sectors such as ICT, legal services, insurance and marketing. Nationally, the
potential construction tender opportunities from converting this space would be
significant.
Today, some
significant retail landlords are taking the initiative to find alternative uses
for surplus space, says Glenigan. Hammerson, one of the UK’s largest owners of shopping
centres, recently unveiled a new strategy which included plans to ‘exit’ the
retail parks sector over the medium term and develop new ‘city quarters’. As
part of its development pipeline, the group has a land bank of at least 65
acres in prime city locations where it is aiming to combine retail with other
lifestyle uses, such as residential, leisure, cultural and flexible workspaces.
By contrast,
Hammerson is paring back its investment in new space. The group’s planned £700
million redevelopment of Brent Cross Shopping Centre (project id 16382735) is
now reported to have been put on hold.
Meanwhile, the other
main quoted shopping centre group, intu – which owns Lakeside in Essex and the
Trafford Centre in Manchester - is also looking at alternative building
projects. The group recently said that it was ‘actively pursuing’ non-retail
development opportunities, particularly around its super-regional centres which
included residential, distribution and leisure schemes. Meanwhile, the group
remains a significant client for the construction industry with a near-term
committed and pipeline of projects worth £441 million, through to the end of
2020.
The major grocery
chains are also looking at wider development plans beyond new supermarket
space. Lidl is reported to be planning to develop more than 3,000 homes
alongside its new stores around London. The German-owned group is looking at
mixed-use schemes that could include offices, hotels and student space.
Already, Lidl has announced plans to invest some £1.45 billion in expanding its
UK portfolio between 2017/18.
The growth of online
shopping is also creating tender opportunities as the larger supermarkets
invest to modernise their existing store formats. Styles & Wood, the major
interiors/refurbishment contractor, has highlighted the significance of
technological change and ‘multi-channel’ operations at the large grocery
multiples, as they seek to make the best use of existing assets and drive
efficiency.
