Up to 70 UK shopping centres could close amid Covid crisis
Sites redeveloped into homes and offices as pandemic and online shopping change face of retail
Up to 70 of Britain’s 700 shopping centres could be set for demolition after the pandemic dealt another blow to ageing malls already suffering from the rise of online shopping and over-expansion of retail space.
Alongside those razed to the ground, many more malls built in the 1970s and 1980s will be at least partly redeveloped into homes, offices or for other uses as the urban landscape is reinvented as a result of changes in the way we live and work accelerated by the pandemic.
At least 30 shopping centres in the UK are now at least half empty including five with more than 80% of their shops vacant as months of high street lockdowns have taken their toll on businesses.
A further 34 have between 40% and 50% of their shops vacant according to a Local Data Company analysis of centres in England, Scotland and Wales with at least 10 shops in them. The analysis does not include outdoor retail parks.
“There’s no doubt that the Covid-19 pandemic has exacerbated many of the challenges we were seeing across the physical retail environment, with shopping centres having been particularly exposed to categories in decline, such as fashion and casual dining,” said Lucy Stainton, the commercial director at LDC.
She says the indoor nature of most schemes and their lack of “essential retail”, such as food or hardware, has put them at a particular disadvantage with the number of vacant units increasing as a result.
“Many shopping centres have been left too long and need a radical rethink,” said Stephen Springham, the head of retail research at property advisory firm Knight Frank who estimates that about 10% of shopping centres are no longer viable.
He believes a further 20% to 30% – about 200 – will need a significant overhaul, with shops retained but parts of the centre converted to homes, offices or other uses.
Shopping malls and high streets were already struggling before the pandemic as the switch to online shopping, over-development of out of town retail, rising costs and a change in habits towards spending on experiences or digital services, such as Netflix and Spotify, instead of “stuff” hit hard.
The high street lockdowns and travel restrictions have only accelerated those trends, with 30% of retail spending now online. Further spending has shifted to local neighbourhoods as more people work from home.
Major chains including Debenhams, Topshop and Thornton’s have disappeared from high streets across the country amid the financial fallout while many more brands have trimmed back their store estate including Marks & Spencer, John Lewis and House of Fraser.
With potential tenants hard to come by, shopping centres already set for redevelopment are Nottingham’s Broadmarsh, where demolition starts this month, Stockton’s Castlegate, the Riverside centre in Shrewsbury, the Chilterns centre in High Wycombe, and Nicholsons in Maidenhead. Work has already begun to knock down south London’s Elephant & Castle centre.
While housing may be the solution for empty shopping malls in more affluent parts of the country, the difference between the value of residential buildings compared with retail may be a sticking point for developers elsewhere. The option for offices, student accommodation, lecture halls or new indoor markets, which are planned in some locations, won’t work everywhere. Some local authorities, including Nottingham and Stockton, are looking at razing shopping centres to build parks.
Stainton says: “There are fresh opportunities for how this space could be used such as flexible offices or community spaces. Likewise, the independents sector has remained comparatively resilient and where shopping centre space has typically been dominated by chains, landlords might look to engage newer brands creating more diverse schemes by return.”
But financing the changes make prove difficult for local authorities, some of which have already been burned by buying up shopping centres only to see their value plummet, adding further pressure on already squeezed budgets. Aside from financing building work, repurposed buildings may not provide the same income from business rates or rental that came from shops.
Demolishing centres also raises questions of sustainability, with the whole process leading to new carbon emissions if existing buildings cannot be repurposed.
“It’s a very complicated process. Just getting the basic finances to stack up is a massive challenge,” says Springham.
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