The failure of one of the UK's largest shopping centre owners, Intu, last summer heralded a massive shift on the High Street and solidified the fact that shopping centres have been one of the hardest hit property classes resulting from the pandemic. But for those in the know, this isn’t news…and, having managed a multibillion-pound portfolio in my former corporate life, I do happen to know a thing or two about shopping centres. When I left the corporate world in 2015 the cracks had very definitely started to show, but the buoyant economy meant that the pace of change was slow.

In the nineties and the noughties there was a clamour from developers and investors to build on our high streets – driven largely by retail demand from the large clothing and variety stores, plus department stores, who were upsizing their concepts and wanted huge market coverage. The likes of Top Shop, River Island, New Look – the so called MSU’s or medium sized units – were clamouring to take large space that just wasn’t available on the traditional High Street. And they were willing to pay big rents to secure it. Local authorities were welcoming the new shopping centre proposals with open arms in order to drive their town centres up the national retail rankings, with all the commensurate benefits that brings – regeneration, employment and a boost to the local economy. Massive returns were being generated from many of these developments, meaning that in some towns and cities there were sometimes two or even three shopping centres located there.  

The beauty of the shopping centre is, of course, that you can "curate" the space within it – you can create your own microenvironment by putting in the right tenant mix, atmosphere, events and customer experience which is left more to chance on the High Street itself. The traditional model of shopping centres has been to have one or two ‘anchor’ tenants – usually department stores – who take space at massively concessionary rents because these big stores would attract shoppers from a very wide catchment and other tenants would want to locate alongside them to take advantage of that too. As online retailing became more popular some of these department store anchors were supplemented, or replaced, by leisure operators – primarily cinemas and clusters of restaurants – to create more of an ‘experience’, giving shoppers an additional reason to use the centres and lengthening the hours of use. Latterly, more local authorities were pushing for new shopping centres to be more open and integrated within the High Street so that they created more benefits and were less like ‘spaceships’ that had landed in that particular town or city.   

But there were cracks appearing well before Covid-19, and the pandemic merely exacerbated trends that were happening already – namely too much retail space in ‘identikit’ towns and cities, coupled with the massive increase in online shopping.  Retailers and restaurateurs had also historically acquired too much space at rents that were proving unsustainable, and very few had evolved their concepts – meaning that there was often no reason for the shopper to visit physical stores rather than shop on the internet.