2022-04-08-莱坊-Shopping_Centres_-_The_changing_Face_April_2022_13页_892kb

Shopping Centres - The Changing Face Summary

Core Content

This report from Knight Frank's Commercial Research Team provides an in-depth analysis of the changing income profiles and vacancy rates of Shopping Centres in the UK, focusing on the impact of structural changes in the retail industry and the role of the pandemic.

Main Findings

• Income Decline: Shopping Centre income has declined significantly over the past four years, with a total drop of -16.5% between 2018 and 2021, slightly less than the industry's "rule of thumb" of -25% to -30%.
• Pre-COVID Trends: The decline in income was more pronounced in the years before the pandemic (2018–2019) than during the pandemic itself (2020–2021), indicating that the structural issues were already in place.
• Sector-Specific Performance:
  • Fashion and Household/General Operators experienced the steepest declines (-22.5% and -26.0%, respectively).
  • Leisure and Banks/Building Societies saw the only positive income growth (+4.9% and +4.7%, respectively).
  • F&B and Cafes/Coffee Shops also saw declines (-21.2% and -12.0%), despite being seen as beneficiaries of tenant mix shifts.
• Regional vs Local Shopping Centres:
  • Regional Centres have a more stable income profile, with Fashion remaining the largest income contributor (around 38%).
  • Local Centres have seen a significant shift away from Fashion (from 21.8% to 16.7%), with Essential Retailers, Value Operators, and Foodstores increasing their share.
• Vacancy Rates:
  • Vacancy rates have virtually doubled over the past four years, reaching 16.6% by the end of 2021.
  • The increase in vacancy was not accelerated by the pandemic, as the rise was similar between 2018–2019 and 2020–2021.
  • Leisure and F&B are showing signs of increasing exposure, with Leisure growing by +70bps in Regional Centres and +120bps in Local Centres.

Key Trends

• Structural Change: The decline in Shopping Centre income is a result of long-term structural shifts in the retail sector, not solely due to the pandemic.
• Occupier Mix Shift: There is a clear trend towards diversification, with Leisure and Essential Retailers becoming more prominent, while Fashion and F&B face ongoing challenges.
• Convenience Focus: Local Shopping Centres are increasingly oriented towards convenience and frequent, low-ticket shopping trips.
• Repositioning: Both Regional and Local Shopping Centres are repositioning to remain relevant, with a common thread of increased Leisure exposure.
• Stabilisation Signs: Vacancy rates are showing signs of stabilisation, with LDC data suggesting a potential decline in national Retail Vacancy rates.

Projected Income Profiles

Local Shopping Centres

• Essential Goods Retailers: 15–20%
• Household Goods/Other/General: 15–18%
• Fashion: 10–15%
• Car Park/Commercialisation/Kiosks: 10–12%
• Grocer/Foodstore/Supermarket: 6–10%
• Café/Coffee Shop: 6–8%
• Dining (sit down): 6–8%
• Leisure: 6–8%
• Value Operators: 6–8%
• Bank/Building Society: 4–5%
• Phone Shops: 3–4%
• Jewellers: 2–3%

Regional Shopping Centres

• Fashion: 35–40%
• Household Goods/Other/General: 15–18%
• Dining (sit down): 10–12%
• Essential Goods Retailers: 10–12%
• Car Park/Commercialisation/Kiosks: 6–7%
• Jewellers: 6–7%
• Leisure: 4–5%
• Phone Shops: 3–4%
• Café/Coffee Shop: 2–3%
• Bank/Building Society: 1–2%
• Grocer/Foodstore/Supermarket: <1%
• Value Operators: <1%

Key Takeaways

• The income profile of Shopping Centres has evolved significantly, with a clear divergence between Local and Regional types.
• Fashion and Household/General Operators are facing long-term structural challenges, while Leisure and Essential Retailers are gaining traction.
• Vacancy rates have risen sharply but not accelerated during the pandemic, indicating that the decline was already underway.
• Convenience is becoming a key differentiator for Local Shopping Centres, whereas destination and one-stop shopping remain central to Regional Centres.
• The future success of Shopping Centres will depend on their ability to align with local needs and reposition effectively.

Methodology

• The analysis is based on anonymised data from Knight Frank's Retail Valuation Practice.
• The dataset includes over 3,800 units across 60 assets, representing a range from small local schemes to large regional malls.
• The data is aggregated to provide insights into income performance, tenant mix changes, and vacancy trends over a four-year period (2018–2021).

Conclusion

There is no universal model for Shopping Centres; each must reflect the unique needs of its catchment area and local market. The most successful schemes will be those that adapt to the evolving consumer landscape, prioritise convenience for Local Centres and destination appeal for Regional Centres, and embrace diversification and repositioning to remain relevant.