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Shopping Centers Today -> June 2003
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EUROPE UNITES, BUT MARKETS RETAIN DISTINCTIONS
BY SUSAN THORNE
BUDAPEST, Hungary — Europe’s retail and shopping center sector is behaving increasingly like one market, but national and local differences are still key, attendees were told at the 28th ICSC European Conference, held here April 2-4.
Speakers pointed out that Europe’s diverse markets are coming into ever-closer contact because of cross-border retailing, the introduction of the euro and the expanding membership of the European Union, which will admit 10 more countries next year. Yet shopping center growth is uneven. Western countries, such as England and France (both of which have more than 2,152 square feet of gross leasable area per 1,000 people), are concentrating on center refurbishment and renovation. Meanwhile, there’s a demand for new centers in Southern and Eastern Europe, said Gontran Thüring, corporate leasing director for Paris-based developer Ségécé. Spain in particular is a hot spot, he said, with 27 new shopping centers having opened in 2002 and 184 planned for the next six years.
The choice of Budapest as conference host reflects Central Europe’s importance as a focus of new shopping center development, most of which is being carried out by Western European investors and developers.
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Consumer confidence and retail spending within Europe also varies, said Darren Rawcliffe, strategy director at U.K. property company Grosvenor. Spain has one of the highest-spending consumer markets, for instance, while in Germany retail purchases over the past decade have fallen as a proportion of total consumer spending, from 35 percent in 1992 to 27 percent in 2002. Shopping centers can do well even where retail spending is subdued, by increasing their market share, Rawcliffe noted, but their performance is determined by local conditions.
“Local dynamics are more important than national or regional factors,” he said.
That message was echoed by Brian Jenkins, chief development officer of the TriGranit Development Corp., an affiliate of Toronto-based Trizec Canada, which developed the Westend and Polus centers in Budapest.
“It’s a very localized business,” he said of shopping center development in Europe. “We’ve found the only approach is to have local people to help you.”
Based on his company’s experience in Europe, Jenkins asserted that adhering to prototypes doesn’t work. “We tried to unroll something like Polus Center [outside Budapest], but it needed a hypermarket to be successful.”
Local identities may actually be growing stronger as Europe’s mall sector integrates, suggested Jaap Gillis, managing director at Multi Development Corp., Gouda, the Netherlands. Gillis said at a panel discussion titled “Doing Business Across Europe: Are We Integrating or Pulling Apart?” that the push for greater Europeanization is causing many Europeans to value their own local identities more. Local or regional retailers make up half the tenant mix at his company’s malls, a share that is increasing.
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