Plans for new shopping centers remain on the cards. Priority is given to the renovation and sustainability of the existing offer.
“Customers have found their way back to our shopping centers and are not looking at the expense.” Nicolas Beaussillon, CEO of Wereldhave Belgium, says he is very satisfied with the number of visitors and the turnover of his shopping outlets, including Belle-Ile in Liège, Ring Kortrijk and Shopping 1 in Genk.
“Customers have found their way back to our shopping centers and are not looking at the expense.” Nicolas Beaussillon, CEO of Wereldhave Belgium, says he is very satisfied with the number of visitors and the turnover of his shopping outlets, including Belle-Ile in Liège, Ring Kortrijk and Shopping 1 in Genk. Same observation of the real estate consultant Ceusters. “The death of the shopping center concept itself has been announced many times, recognizes Nathalie Verheyen, teamleader retail agency at Ceusters. However, the shopping centers in our portfolio demonstrate the opposite.” The number of visitors is 4% higher compared to September 2019, the year before the coronavirus. Ceusters even noted an increase of 17% compared to September 2021. Another positive point: the number of unoccupied stores in Belgium fell (slightly) for the first time in a long time: the retail specialist Locatus recorded a drop from 11.9 to 11.6%. Despite all this good news, Nathalie Verheyen and Nicolas Beaussillon have some reservations. These encouraging figures relate to the period up to the end of September this year. The question today is how the retail sector will get through the winter. “Caution remains in order, says John Collin, executive director of real estate consultant CBRE. The energy crisis will certainly impact the turnover of traders. Not to mention the indexation of wages and rents, the explosion of energy bills ,…” Gerard Zandbergen, CEO of Locatus, also foresees a darker future. “The commercial real estate sector is going to have some pretty tough times, I’m afraid, he predicts. The challenges will outnumber the opportunities.” What exactly will these challenges be? “Fifteen years ago, we received a request from a European retailer every week to help it carry out its expansion projects in Belgium. That era is well and truly over”, observes John Collin. In the meantime, most major retailers have developed their network of points of sale in our country. As Nicolas Beaussillon points out, some chains are still looking for new stores but growth has become “more cautious”. These days, retailers have other priorities than conquering the Belgian market. “Major retailers are sifting through their network, continues John Collin. They are closing unprofitable stores and relocating stores that are too small or too big.” In a mature market like ours, expanding the store offering is anything but a good idea. “In town centers and small shopping centers, we are witnessing the opposite phenomenon, observes Gerard Zandbergen. Unoccupied stores are reassigned and often transformed into dwellings. This is why the vacancy rate is down slightly for the first time since long time.” Locatus figures show a drop in the number of small businesses from 88,000 in 2010 to around 73,000 today. “In reality, there is so to speak no more room for major retail projects in our country, notes Nathalie Verheyen. And obtaining permits is increasingly difficult.” At least for the new big malls. Regarding Neo, the shopping center project of Unibail-Rodamco-Westfield at Heysel in Brussels, the deadline for compliance with urban planning standards has been postponed to 2026, reports the magazine Bruzz. Broeklin, the “workshop-shop district” replacing the rejected Uplace project in Machelen, obtained the permit last year, which did not prevent the city of Vilvoorde from appealing to the Raad voor Vergunningsbetwistingen (Council licensing disputes). Despite this, the total number of square meters of commercial space continues to grow, notes Gerard Zandbergen. Thanks to the success of a very specific segment, namely retail parks. “As long as the construction and rental of this type of store is profitable, it will be impossible to stem the trend, says Gerard Zandbergen. The problem is that all the social costs, such as mobility problems for example, are not not taken into account. Obtaining permits is not easy, of course, but there are still quite a few projects in the pipeline. And once the permit is in your pocket, who can prevent you from making your project a reality? John Collin points out, however, that in the case of new retail parks like Malinas in Mechelen and Quartier Enée in Namur (opening announced for April 2023), two Mitiska REIM projects, it is essentially a grouping of existing peripheral stores. “In Malinas, more than half of the commercial space is occupied by tenants who used to live in Rodekruisplein. The clustering within an integrated and welcoming retail park is a good thing in my opinion.” If the need for new shopping centers is almost non-existent, the revamping of the existing offer is on the other hand essential, which most owners are perfectly aware of. AG Real Estate has invested heavily in the renovation of Westland Shopping in Anderlecht. At the end of October, Redevco opens Rich’l in Waterloo, a revised version of a 1970s retail park. Already revamped a few years ago, Wijnegem Shop Eat Enjoy (AEW and Axa) is the subject of a extensive renovation and extension. Ditto for Belle-Ile in Liège. Note in passing that despite the relative saturation of the market, the renovation always provides for a few additional square meters. The extension turns out to be necessary, in a way, to justify a large investment in outdated real estate. But, specifies Nicolas Beaussillon, this new space generally receives a different assignment. “Our strategy aims to transform shopping into a full-service centre, he explains. The monofunctional shopping center is a thing of the past. In Belle-Ile, the additional square meters are allocated to leisure, sport and offices.” “The addition of the leisure, food and beverage dimension is a must, confirms Nathalie Verheyen. The shopping center must be able to compete with the city center. Wijnegem’s biggest competitor is the center of Antwerp where it is possible to do window shopping, having a drink, eating out, visiting a museum, going to the cinema, etc. The ‘new’ shopping center must offer the same offer, at another level.” Confirmation from Gerard Zandbergen who adds that the larger the shopping center, the more its attractiveness increases. “This is also true for intra-city real estate, hence the difficulties faced by small commercial towns.” The “new” Westland Shopping has undergone both cosmetic and technical upgrades. A new geothermal installation provides air conditioning and heating for the building. The sustainability efforts deployed as part of the renovation should earn it the BREEAM certificate of excellence. Mitiska REIM opened in Ninove this summer Ninouter, a CO2-neutral retail park. The roof of the park is covered with 2,500 solar panels. The Waasland Shopping in Saint-Nicolas has also invested heavily in solar energy. The new carport of some 4,000 m2 is completely covered with solar panels. All of these examples illustrate the importance of sustainability for shopping center owners and operators. “Sustainability is now the number one priority in every renovation, every new investment, confides Nathalie Verheyen. Due in particular to the public’s increased awareness of climate issues. A recurring theme in the marketing communication of shopping centers, climate issues are now also required at the building level.” The business landscape is constantly changing. Consumer preferences change quickly, shopping trends follow each other and are not alike. Although less virulent since the end of the pandemic, the threat of e-commerce is a real risk that physical stores must constantly take into account. There are many uncertainties, hence the need for retailers to be flexible, according to Nathalie Verheyen. “Retailers want to limit the risks and are reluctant to make long-term commitments. They favor short-term flexible leases, which obviously does not suit landlords. The value of their portfolio depends essentially on the duration of the leases and the related risks. In the current context – tenant market -, the owners are willing to satisfy their tenants. To grant a free rental period, to bear part of the investments necessary for the renovation and refitting of the store. Unfortunately, our legislation on commercial leases, which is strict and protective, only offers very narrow room for maneuver to the players concerned.” “The Belgian law on commercial leases is outdated and this is known throughout Europe, adds John Collin. The financial contribution of the owner to the layout of the store easily amounts to several hundred thousand euros. He wants therefore know with certainty in what period he will be able to amortize this investment. However, the law authorizes the tenant to give up his lease after three years. This right is binding.” Retailers and landlords should forget the classic tenant/landlord opposition, believes John Collin. “My advice to landlords? Make the retailer your partner. Brainstorm and find solutions together. After all, you share the same interests: a satisfied tenant has no reason to leave.”