URBAN CREATORS. Architecture | Development & Project Management European Council of Shopping Places (ECSP) Awards: Commendation for Best Renovation/Expansion for centres between 15.000 – 45.000 sqm
Page 11 T O M CENTERS April <strong>2024</strong> From mixed-use to events, many shopping centers are looking for concepts to position themselves for the future. Symbolic image: Unsplash / Krisztina Papp Shopping centers reposition themselves White paper sheds light on the situation of the asset class Shopping centers find themselves in a challenging competitive environment. Global crises and war situations are driving up costs, unsettling customers and resulting in a reluctance to spend while at the same time reducing rental income. Despite the difficult waters, center managers are trying to develop solutions to make their centers fit for the future. Mixeduse is already a proven trend, as are measures such as increased and cost-saving energy efficiency and attractive events. Decline in rental volume „Of course, these can be sensible measures to combat vacancies and declining visitor frequency. However, it is impressive to see the different lines of development that are emerging in shopping centers,“ says EHI study author and retail real estate expert Lena Knopf, explaining the results of the white paper „Center Management in Focus“ by EHI and GCSP. In a clear majority of around two thirds of centers, the rental volume (excluding ancillary costs) declined between 2021 and 2023. The two main reasons for this are subsequent lettings with lower rents to retailers and rent reductions on existing contracts. Events increase attractiveness Only in the more recent centers built after 2010 did the proportion with increased rental income outweigh the proportion with decreased rental income. The centers with retail space of between 30 and 40,000 square meters performed the worst. The smallest centers with ten to 20,000 square meters of retail space performed best, with the lowest proportion of decreased rental income and the highest proportion of increased rental income. Increased mixed-use concepts such as leisure facilities or medical services are attracting new tenants to shopping centers. Events are an established measure to increase the attractiveness of a shopping center and strengthen customer loyalty. Seasonal occasions such as Christmas or Easter (93%) promise the greatest success, followed by fun events suitable for families (73%). Overall, many centers (43%) are organizing fewer events than before the pandemic or the same number (46%). The larger centers are in the lead. The smaller the center, the more difficult it is to host many successful events. Every second small center under 20,000 square meters reduces the number of events, but only around one in three large centers with 40,000 square meters or more. Frequency and turnover Visitor frequency - often measured using video, light or laser technology - has fallen in 54% of shopping centers compared to the pre-coronavirus level in 2019, but 30% have observed a constant frequency and only 16% are happy about more customers. However, retail sales are looking slightly better. At 35%, they are higher or even significantly higher, and at 29% they are at a similar level - even though this growth is currently accompanied by relatively high inflation rates, which means that many retail sectors have been able to increase their sales in nominal terms but not in real terms. Often moderate vacancy rate More than half of the centers (57%) have a moderate vacancy rate of up to 5% of the retail rental space. A good third (34%) of centers even have a low vacancy rate of up to 3% this year, although this was almost twice as many (66%) in 2019. The proportion of centers with vacancies of more than five percent has more than doubled from 19 percent in 2019 to 44 percent in <strong>2024</strong>.
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