Rethinking shopping centres

Rethinking shopping centres 12 January 2023

Key funding, management and valuation considerations to future-proof retail assets.

Key funding, management and valuation considerations to future-proof retail assets.

What do you do with an underperforming shopping centre? This was the subject of a recent roundtable discussion hosted at our London office, bringing together investors, REITs, and local authorities, all facing similar challenges and opportunities. The takeaway – while repositioning and adapting a shopping centre to reflect structural change and evolving consumer demand isn’t easy, inaction or sticking to outdated approaches may come at a higher cost, especially over the long term.

While many shopping centres continue to perform well, the reality is that following a glut of investment in retail assets in the early 2000s, there are locations where UK is oversupplied when it comes to shopping centre retail. Think of where you made your own recent purchases, and you can probably start to understand why. Perhaps, like 40 per cent of the UK population, you did your shopping online. Or feeling the impact of the cost-of-living crisis, you shopped less. Maybe you shopped at your recently (re)-discovered local high street or market, supporting the small business owners who saw you through the depths of lockdown.

Macroeconomic trends impact patterns of ownership and investment as well as performance. For local authorities who recently acquired shopping centres, investment and intervention has become both harder in financial terms, and more important in the context of town centre revitalisation. We are in an environment where both the public sector and the private sector are reluctant to go it alone to intervene in struggling shopping centres.

If we accept that the environment in which shopping centres operate remains the same, or even becomes more unfavourable, asset investors, owners, and managers are confronted with the need to change. While no one single modification will fix all challenges, nor will one approach work for all locations, our discussion highlighted three themes for consideration:


The means by which shopping centres are valued impacts how decisions are made about funding and financing assets. While necessary for transactions, Red Book valuation is just one way that decisions about shopping centre assets should be made. Local authorities and investors are increasingly taking into account the wider economic impact of asset performance, from business rates, job creation, and the provision of healthcare, skills, and cultural amenities. In some instances, investors may treat shopping centres as part of a place-based investment strategy, sitting alongside investments in the surrounding area. Understanding value in this wider context requires additional methods which go hand in hand with established valuation approaches, – including, benchmarking, business cases, and impact assessments.

Operation and Management

Changes in retail, economic, and social trends mean taking a more proactive approach to asset management, operations, and activation. This is true both in the development and operation of majority-retail shopping centres and in the repurposing and diversifying of existing assets, including meanwhile uses. Not all investors or owners have the appetite, structure, or people to change how they operate assets overnight. Take what happened in other sectors that have undergone structural change. The rise of ‘space as a service’ and the arrival of new operators of commercial space prompted a shift to proactive management and engagement with tenants, often adopting a white-label approach before evolving their own workspace brand.

Funding and Finance

Whether operational change or full-scale redevelopment is proposed, a shift in mindset is required when it comes to the timeframe and basis for investment decisions. A coalition of intermediaries, including developers, operators, peers, and the RICS, need to drive this shift – emphasizing that a more proactive and less linear approach to investment in shopping centre assets is needed to appreciate their true long-term value. The narrow range in ownership and management of shopping centres suggests the need to diversify financial stakeholders in town centres, and to identify and deliver shopping centre strategies that focus on outcome rather than output, supported by partnership and collaboration.

What is clear is that the solutions to today’s issues will not be solved by traditional retail thinkers alone, we need investors, owners, and managers who embrace the opportunity that these assets can present, and value the ability to align finance to outcomes, in terms of timescale, impact, risk, and reward.

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