Shopping centres are planning active development
Over the next few years, more than 10 leisure and shopping centres are planned to be built, expanded or reconstructed in the Baltic States. The experts of the international real estate advisory company Newsec estimate that about 30% of the total area of the shopping centres in Lithuania will consist of newly built, renewed or expanded space by the end of 2020. In Latvia, this indicator will reach 50%, and 35% in Estonia.
According to Mrs Jūratė Gaspariūnienė, the Head of the Newsec Commercial Property Management Group, the shopping centres in Lithuania have reached the cycle limit – approximately 80 percent of the commercial area. They are entering the second decade of operation and start to talk about the renewal. They are preparing a wide range of different scenarios, and a large part of them have scheduled the development. New projects are being prepared and such intensity has not been seen in our region for some time.
Renewal and constructions are planned in Lithuania
Changes in the area of restaurants and entertainment at the shopping and entertainment centre Akropolis in Kaunas are being planned – the entertainment and restaurant area of about 10 thousand square meters will be renewed. The works will take up to 1.5 year, and the total investment will amount to about 10 million euros. After the renewal, the area of public spaces will increase from 300 square meters to more than 2 thousand square meters among the total area of restaurants and entertainment at the shopping and entertainment centre Akropolis in Kaunas.
The last significant renewal of the shopping centres in Lithuania took place at the end of 2016, when the Mega shopping centre in Kaunas was renewed and expanded: the commercial area was increased by more than 40% and amounted to 83 thousand square meters, while the number of tenants increased to 200.
It is planned that by the end of 2020, approximately 330 thousand square meters of new area will emerge in the retail trade market in the Baltic States. So far, in Lithuania it has been most actively discussed about the shopping centre Vilnius Outlet that is being planned to be constructed at the outskirts of the neighbourhood Pilaite, which will have the total area of 60 thousand square meters.
Intense development in neighbouring countries
By the number of new projects in the retail trade sector, Tallinn occupies the position of the leader in the Baltic region. The real estate market of the city will soon be complemented by two newly constructed large shopping centres: T1 and Porto Franco, currently under construction.
The development is also being carried out by the Tallinn shopping centre Ülemiste, where it is planned to equip a leisure and entertainment area with a cinema theatre and an additional area for restaurants and cafés.
An important event in the retail trade market in Latvia is the construction of the shopping centre Akropolis in Riga, which will be opened in 2019. An area of 9 square meters out of the total 98 thousand square meters is planned to be dedicated for the office space. The total value of this project will be as high as 177 million euros. The last time a similar multifunctional shopping and entertainment centre in Riga was opened a decade ago.
In 2017 two major shopping centres in Riga, Alfa and Origo, announced their plans for enlargement. It is planned that the centres will be modernized on the basis of advanced technologies and the enlargement will be performed in accordance with the BREEAM certification system requirements. The total expenditure for the development of these shopping centres is estimated at 110 million euros.
The changing face of shopping centres
Mrs J. Gaspariūnienė notices three main trends emerging in the retail trade market. The first trend points the changes in the food and entertainment area.
“There have been discussions regarding the share of the area occupied by cafes and restaurants at shopping centres for some time. Recently it has become increasingly common to agree that this area should reach about 10-15% of the leased space. The restaurant sector is not prepared and does not see possibilities to successfully exploit a very large area, comprising about 30% of the total shopping centres’ area,” said the representative of Newsec.
According to Mrs J. Gaspariūnienė, the renewed shopping centres also look for new entertainments that could be of interest to their visitors, since the modern innovative internet-proficient generation has become accustomed to other ways of spending their leisure time.
“Seeking to meet the global trends in shopping and leisure centres, the trade and entertainment area of Kaunas shopping and entertainment centre Akropolis is undergoing transformations. The entertainment area is planned to become more open by removing sham partitions and decorations. One of the main attractions of the leisure area located on the 3rd floor will be a city square with authentic fragments of the Old Town buildings. It is planned that this space will be a venue for exhibitions, campaigns, tastings, watching of sporting events, as well as other community gatherings,” said the Head of the Newsec Commercial Property Management Group.
The third trend is the growing influence of e-commerce on shopping centres. Taking into account the global trends, traditional shopping centres will displace outlets that sell space-occupying products, such as baby carts, garden goods, and other large-size equipment. These goods will be moved to the electronic space, and instead such commodities as cosmetics, food products, accessories, fashion segment items and other products that the buyers want to touch, smell or taste will be sold at shopping centres.
Inditex, an international fashion retailer, has recently announced an annual growth rate of e-commerce by 41 percent. In Lithuania, a growth of e-commerce up to 30 percent has also been recorded. At the same time, another phenomenon is being observed – the leaders of e-commerce offers trade demos with the opportunity to buy goods on the spot.
“Although there are many speculations so far that, for example, shopping centres may eventually become warehouses for collection of goods, however, there are no many objective arguments to support this view. It is important to note that e-commerce still accounts for less than a tenth of the market, and its growth rates are in a large part attributed to the expansion of e-commerce markets. A human is a social being for whom it is important to communicate, meet, listen, see, and touch. Therefore, it is difficult to imagine that such commodities as perfumery or food products, for the selection of which an individual, sensory evaluation is important, would be moved to the Internet. The colour, texture and features – many of these characteristics cannot be fully conveyed by technology-based e-commerce yet. In addition, the sale process requires customer satisfaction and instant feedback and this is an issue that e-commerce has difficulties to deal with so far,” said the Head of the Newsec Commercial Property Management Group.