Current Affairs Shopping mall boom at an end
Recent years in the Czech Republic saw a major boom in new shopping centre development throughout the country. Now the boom is at an end. According to the daily Lidové noviny, 2011 will be the first year in two decades which will not see the opening of a single new large retail centre.
A little earlier Jan Velinger spoke about the reasons with Richard Curran
of the Czech branch of real estate advisor CB Richard Ellis.
“I think that as the retail space per head of population catches up with Western levels, this decrease in development is part of a natural slowdown. That, coupled with the financial crisis which saw financing for new development –virtually all real estate, not just shopping centres – dry up, led to the massive reduction in new projects. I think developers to an extent are taking up new tactics.”
What will change?
Richard Curran
“Well the development of large-scale shopping centres will not cease
entirely but will be very, very specific and opportunity-driven. Developers
will focus on retail parks going forward, focussing on smaller cities with
populations of 20,000 – 50,000 people that wouldn’t support
larger-scale, modern shopping centres with a hyper-market anchor and 40 or
so retailers. They will be smaller sites between 5,000 – 10,000 square
metres which will have your shoe store, pharmacy, a couple clothing
retailers and so on. The focus will be on smaller cities.”
If the market is just about fully saturated in the bigger cities like Prague, how are already existing malls doing?
“Certainly what we’ve seen in the last three years is the distinction between well-performing shopping centres and those that have done poorly. Going back seven or eight years when there was this rush in development and not enough space per consumer head virtually every shopping centre performed and traded well. As the market became more saturated we’ve seen a division between those that have continued to perform and those that are doing poorly and require re-direction and heavy asset management.
“We have even seen one case in Stodůlky being sold off and is now being
used as a warehouse by a furniture company. Retail location is always a
major factor: those sites that aren’t as well located or didn’t have
the right location in the first place or just leased to the highest bidder
and didn’t really think about it - or don’t have a clear structure
within the site to attract customer flow throughout the centre - are
clearly the ones struggling at the moment.”
