Copyright: David Lawson – Plaza magazine 2003
Yet today almost every centre across Europe is being reinvented as a pleasure palace. Funfairs may be rare but cinemas are common, as are food courts, amusement halls and fitness centres. A few even have ski slopes. Sometimes it is difficult to tell where shopping ends and play begins. In another 20 years, forecasters believe the pendulum will have swung so far that many centres will be the equivalent of travelling shows, flitting from place to place and attracting buyers with spectacular entertainments.
The revolution is not surprising. Shopping has itself become a leisure activity, geared as much to browsing boutiques and coffee shops as stocking up on baked beans. Putting the two under the same roof seems a natural progression.
But this has thrown up all sorts of challenges. What kinds of leisure do you bring in? What is the right mix? There appear to be no hard and fast rules. Mix varies from city to city, let alone between countries. A ski centre may suite Leeds or Madrid, but not Warsaw or Lille. An open plan foodcourt would be filled in Manchester but shunned in Milan.
No two developers have identical views. ‘This is still a learning experience,’ says one. ‘It is an art rather than a science.’ But there are some fundamental truths. Leisure has two functions: to attract people into a shopping centre and to keep them there longer. Cinemas are a favourite magnet. Pradera Retail Fund’s centres in Barcelona and Athens sold more than 2m tickets each last year, according to director Colin Campbell. That’s a lot of potential shoppers coming in the doors.
But Star Wars and Harry Potter are no panacea. Many of mainland Europe’s centres are anchored by hypermarkets, and food shopping – usually done during the day - does not necessarily mix with filmgoing. Cinemas can be a useful way of extending the time a centre is used – doubling up use of the car park, for instance. ‘They add rather than integrate into hypermarket centres,’ says Jeremy Lewis, chairman of Eurocommercial Properties. One of his crown jewels, I Gigli, Italy’s largest centre, has a 16-screen cinema is going up in the car park.
External location also suits countries like France, where shops close relatively early. And it helps investors separate the elements – important when cinemas yield 7.5-8% compared with 6% for retail.
Food is more relevant when consumed on-site. For all the headlines about snowdomes and multiplexes, eating and drinking is the main leisure element in retail centres. They provide the ‘dwell’ factor [encouraging people to stay longer] as well as sometimes the ‘wow’ factor – getting people into the centre. Lewis allocates at least 20% of his centres to restaurants and is adding new ones all the time.
Again there is no consistency, however. Southern Europe leans to bistros and individual restaurants. Northerners graze in food courts. This is not just because of different culinary cultures. ‘People are less well housed than in northern Europe and prefer an evening at restaurant to a small flat on the outskirts of Barcelona,’ says Campbell. They are also a lot better behaved. He shies away from spending on leisure in the north, comparing the sight of families gathered for a midnight meal around a Mediterranean piazza with drunken louts carousing through a British mall.
Cinemas and food make a more palatable mix. Grosvenor, which has interests in shopping centres across six countries, says burger and pizza sales are boosted more than 20% by a multiplex. Many a UK centre has been rescued from near-death by this discovery. Wood Green, a dreary north London shopping centre was transformed when new owners Capital & Regional discovered that most visitors treated shopping as a leisure trip. It built on this by proposing places weary shoppers could eat and drink but found they could not survive just on day trade. So in came a cinema to extend hours – and boost daytime footfall.
Working out the right mix of food and film is critical., says F.G.T van Kelse of developer MDC Amstelland, which has built a series of award winning centres across Europe. Southern Europeans expect quality eating as part of a day out: northerners are different. ‘I don’t know of anyone who would have an anniversary dinner in a shopping centre,’ he says. C&R chief executive Martin Barber might disagree, as he regularly crosses London for dinner at Wood Green.
Urban developments like this work by different rules, however, reflecting the mix of leisure and retailing around them. Yet regional centres are could claim to be creating a similar diversity. Bluewater, near London, developed by Lend Lease, has three large wings devoted to leisure – one cinema and two eating areas. Each is associated with a different type of retail: a foodcourt next to high street family shopping, more tranquil sit-down eating for boutique and up-market stores, and more jazzy catering like TGI Friday next to the cinema.
MDC’s 250m Euro Almada Centre, just completed near Lisbon, has 35 restaurants, a Warner-Lusomundo and is set around squares which match leisure to science/technology themes in one part and household goods/boutiques in another. Parkview is following a similar strategy at Battersea, in London, where plans for the derelict power station have evolved from pure leisure to two-thirds retail. This will be split to provide more traditional premium shopping for ‘oldsters’ with more trendy retailing for younger customers drawn in by facilities like a massive digital cinema.
There is also a growing market for leisure on retail parks. C&R is introducing a ‘pod’ system to its 15 out-of-town centres which include facilities like climbing walls and coffee shops. Long-distance shoppers will welcome such relief, much in the way they are drawn to shopping centres by good restaurants.
Changing to match new demands is critical. ‘We are learning all the time,’ says Lend Lease retail director Keith Stone. Feedback from visitors has led to retail space at Bluewater being sacrificed for coffee-shops every 75 metres as rest points. A new centre being planned by the firm in Norwich will switch from open-plan to more intimate dining because of similar shopper polling.
Developers remain convinced that catering in all its forms will be the most critical leisure element within retail centres. ‘A merry-go-round adds little to the retail experience yet food and drink is the cement between retail and leisure,’ says Ian Rumgay, project manager at Battersea.
But there is a danger that leisure could be given too much weight as a factor in retailing success. Firstly, some countries are just not part of the game. Gleeds, which is involved in building shopping centres in half a dozen countries, points out the low average income in a city like Warsaw would not justify high leisure content let alone expensive restaurants. It certainly could not use food – or any kind of leisure as an anchor.
And that applies in the affluent west, too. A high profile scheme like The Mills Group’s Madrid Xanadu may promise a ‘winter sports palace’ but is solidly based on Spain’s biggest department store and an upmarket hypermarket. Heron director Peter Ferrari says he would love to create 50:50 mixed schemes but the firm’s chain of ‘cities’ are pure leisure centres. ‘It would require twice the scale – around 50,000 sq metres to create a critical retail-leisure mass,’ he says. Xscape, the ski-centre and cinema concept being developed by Capital & Regional, relies on location near retail for its synergy.
Retailers themselves are curiously cool about the whole issue. Pierre Combet, formerly director of international expansion with Grandoptical/Vision Express, Camaieu and Sunglass Hut, and now director of online information centre RetailP, says leisure facilities rarely create higher turnover. Retailers might be attracted into a centre because it appeared more likely to attract shoppers but would be unlikely to pay higher rents. Values are set by local supply and demand rather than some overarching set of standards. Retail and leisure mix work by similar rules. Madrid Xanadu, for instance, is a regional centre, so it provides convenience shopping.
The underlying problem is that developers are thinking in different time frames to retailers. They have to plan 10 years ahead, when boutiques may have become unfashionable and shoeshops disappeared onto the internet. So they are looking for other attractions to pull in customers. Retailers are only interested in today, says Keith Harris, head of retail and leisure at Insignia. They look for a critical mass of similar outlets or a retail anchor. There are exceptions: C&R is seeing a 20% uplift on its second Xscape scheme in Leeds, but these are specialist retailers associated with the concept.
So the message is plain:
But it can’t provide the underlying rationale for a scheme, no matter what the publicity implies. ‘It’s quite simple, ‘ says Chris Warren, head of retail and leisure at Cushman & Wakefield Healey & Baker. ‘You can’t turn a bad retail site into a good one.’ Only time will tell whether developers and investors have lost sight of this fundamental premises.
Urban Entertainment Centres 4%
Stand Alone Multiplexes 38%
Shopping Centres + Leisure 32%
Retail/Leisure Parks 12%
Other 2%
Source: Cushman & Wakefield Healey & BakerRents: In UK, retail zone A rents are approx £85/90 sq ft, leisure is £10 sq ft
Construction: Retail shell costs £500-650 sq metre; leisure can be £650-900 sq metre
Services: separate entrances and structural grid alteration would cost more; could lose a ground floor unit to stairs for access; extra building height and possible drainage and holding tank requirements (especially for pools). Steel frame rather than concrete required to support upper-storey cinema.
Generally the centre will be larger but leisure and retail will share common parts and services such as roof, electricity roads and parking. It is cheaper to provide a combined facility unless it becomes a very large building.
Source: GleedsPradera – European Retail Fund concentrating on out-of-town retail property in France, Greece, Italy and Spain . Set up only two years ago, it has a target of 800m Euro, and owns centres such as the 20,000 sq metre Village Entertainment Park in Athens.
Eurocommercial – an Amsterdam quoted company specialising in Italian, French and Scandinavian shopping centres. Assets of more than one billion Euro.
Lend Lease – one of the world’s giant property investors. Developments include the groundbreaking 1.5m sq ft Bluewater Centre near London, which includes 250,000 sq ft of leisure ranging from a multiplex to coffee bars.
Parkview – a far-Eastern investor which has spent 10 years planning the 1.4m sq ft London Battersea development. One-third of the main building will be high quality retail, with the rest given over to a digital cinema, restaurants auditorium and bars.
Capital & Regional – as a developer the company originated the leisure-based Xscape concept, which is being rolled out across Europe. It recently evolved into a property manager, handling almost a dozen shopping malls worth over £650m and 15 retail parks, and took over MWB’s £500m leisure property funds.