Europe’s First Half Retail Down, Surge Expected

LONDON-Total shopping center completions totaled about 22.6 million square feet across Europe in the first half of 2011, according to a recent Cushman & Wakefield report, though that figure is down 31% from the previous six months. However, most European retail experts believe the development finishes will increase again the second half of 2011 to about 73 million square feet, exceeding the total 2010 figure by 26%.

The second half of 2010 saw immense growth, and this year should be similar, according to the report. There’s about 50 million square feet in the pipeline now, and about 62 million square feet in the 2012 pipeline, though there have been a number of delays and missed starts as the region struggles with the debt crisis.

Planned retail development in Russia and Turkey by far overshadows the rest of Europe, with about 41% of the total pipeline. Russia alone is expected to increase its retail floor space by about 33 million square feet, with about 4.3 million square feet under construction in Moscow.

France and Italy round out the top four retail developing countries, though most of France’s projects are small and Italy’s developments have been hit with delays in recent months. Spain’s 2012 pipeline remains healthy, though several recent projects have been put on hold, and there is uncertainty about completion dates for others.

Germany and the United Kingdom, retail powerhouses for the past few years, are also struggling today. In Germany, the 2011 and 2012 development totals will be the lowest on record since 1990. Completions in the United Kingdom will reach a historic low in 2012, with only a handful of projects planned before the end of next year.

Mike Rodda, head of cross-border retail investment at Cushman, said Europe currently seems to be a two-speed market. “Financing transactions is becoming increasingly problematic and will cause a number of deals to fall down before year-end,” he said in a statement. “However, capital from new sources is growing as a number of larger transactions are attracting joint venture bids or co-investment.”