Shopping centres are evolving: more investment to adapt to consumers and compete with online shopping

Shopping centres are facing up to the threat of e-Commerce and have made up around half of all retail investment in the last year. Increased revenue and footfall in such places over recent years is making investors put in millions in order to modernise properties and adapt to consumers.
Operations like the remodelling of Glòries (Barcelona) after an investment of 148 million euros and 23 months of work, or the 3.2 million spent on the remodelling of Portal de La Marina (Alicante) are examples that are looking to increase asset profitability with added leisure and dining options. These changes look to get more visitors, adapt to new customers with a new image and incorporate more services for visitors in the fight to compete with e-Commerce, providing expediencies that cannot be enjoyed when buying from home. That is why shopping centres are one of the most attractive assets for investors.

Repositioning of shopping centres

The positive results from macroeconomic indicators and favourable perspectives for 2018-2020 will favour both creation of new shopping centres in secondary towns, as well as remodelling old centres to meet current demand, including spaces for leisure, dining and shopping.

Shopping centre potential, keys for analysis

• Sector on the rise which is fed by other sectors like spending and tourism. This represents key investment in touristic and commercial areas (Barcelona, Madrid, Canary Islands, Alicante, Málaga, Valencia, Balearic Islands, Bilbao…), especially where there is lower commercial density is low and the average level of spending per inhabitant is higher.
• There are currently 555 shopping centres, with more than 15mm² of SBA. In 2018, we will likely see 8 new openings, which will add more than 350,000m² to the current SBA, and looking to add more leaisure and dining options.
• Sales of products grew by around 3.5%, which has increased the average rents.
• In Madrid and Barcelona rents are around 85-95€/m²/month for shopping centres and around 15-20€/m²/month in medium size malls.
• Valencia and Sevilla are both at slightly lower prices, at 50-60€/m²/month.
• Bilbao and Málaga, who have seen substantial growth over recent months, are at an average of 40-45€/m²/month.
• Profitability varies significantly based on asset location. In the case of prime shopping centres in big cities, it stands at around 5-5.5%, increasing one point for medium sized malls. In secondary markets, profitability is around 5.5-6.5% and in some cases are higher. Valencia, Sevilla, Bilbao and Málaga, are key examples, as they have the following average yields: 5.35%, 5.50%, 5.50% and 5.60%.