The recent closure of Toys “R” Us and Maplin has highlighted that many shopping centres are struggling to keep tenants. Landlords have been asked to reduce or freeze rents by struggling retailers or else risk their property being empty. The growth of online sellers has resulted in fewer people buying at physical shops.
Commercial mortgages are still available to purchase retail properties, but many investors are cautious about purchasing.
One suggestion for the long-term future of shopping centres is diversification. Large shopping complexes could contain art centres, health centres, co-working spaces, libraries and other amenities that attract people. Empty retail space can be converted to residential use.
Amazon in America has physical stores that promote their online services. They and other large online retailers could be persuaded to have a physical presence in UK shopping centres.
Shopping centres could be landscaped to create green spaces and have better play areas to attract families.
A shopping centre in Motherwell in Scotland is one place where diversification is practiced. The centre has a wider range of tenants than similar centres, and is holding a series of community events and festivals to increase footfall in the centre. Transport providers improved public transport links to the centre, and plants were grown to make the centre more attractive.
Retail property developers need to think creatively or as, Phil Prentice of Scotland’s Towns Partnership puts it:
“Time to think outside of that big box to see what small boxes go back inside.”