Real Estate

<p style="text-align: justify;">There are countless definitions of a shopping centre. One must only do a google search to come across a plurality of summaries that have gradually been enriched over time, adapting to the format's evolution and regulatory and authorisation provisions.</p><h2 style="text-align: justify;"><span style="font-size: 14pt;">Definition of Shopping Centre</span>&nbsp;</h2><p style="text-align: justify;">"Buildings designed and constructed according to unambiguous criteria, size and merchandising mix commensurate with the catchment area (which unfortunately is not always the case), presence of a plurality of common services, unified and coordinated image, unified management", are the descriptions most frequently found.</p><p style="text-align: justify;">After decades of an evolutionary (and in many cases regressive) cycle of the 'shopping centre species', there is, at present, significant heterogeneity. Consequently, it is increasingly difficult to give general, all-encompassing definitions.</p><h2 style="text-align: justify;"><span style="font-size: 14pt;">Shopping Centre Species</span></h2><p style="text-align: justify;">I have devoted my professional activity to studying the various 'shopping centre &nbsp;species' for over 25 years. Yet, when I visit a shopping centre, I have reached an almost trivial distinction, all related to the emotional sphere.</p><p style="text-align: justify;">This method of emotional evaluation (a far cry from a 'professional' analysis) is about feeling relaxed and happy to be in a specific place, rather than wholly indifferent and focused solely on the need to buy one product rather than another.In the former case, this 'emotional echo' remains alive in time; in the latter, it is absent.&nbsp;</p><p style="text-align: justify;">I have noticed that the more the shopping centre is integrated into the organised urban component of residences, offices, shops, and outdoor spaces, the more I enjoy 'experiencing' it.</p><h2 style="text-align: justify;"><span style="font-size: 14pt;">Urban Planning in Italy&nbsp;</span></h2><p style="text-align: justify;">Few shopping centres are integrated into urban contexts, especially in Italy, thanks to political obtuseness.&nbsp;</p><p style="text-align: justify;">If we look at the development of shopping centres, small schemes were favoured, which then inevitably went into crisis over the years, and shopping centres had to be relocated away from town centres. A kind of 'reverse' development created the conditions for the involution of a significant percentage of this market, which is today fragmented and weak.</p><p style="text-align: justify;">At the same time, we see a significant evolution as in recent years, the development of retail formats has been integrated within completely redesigned urban areas, coexisting with offices and residences, an exciting and positive evolution.&nbsp;</p><p style="text-align: justify;"><strong>Evolution of Shopping Centres&nbsp;</strong></p><p style="text-align: justify;">Here in Italy, Milan has now taken on the characteristics of an international city; entire urban areas have been (or will be) completely transformed.</p><p style="text-align: justify;">And within these redeveloped urban areas, we see the evolution of the 'shopping centre' species; a small percentage of projects but full of added value for those who can 'experience' them.</p><p style="text-align: justify;">In some cases, this integration still envisages the shopping centre as a single entity embedded in the urban connective tissue. The commercial offer is still 'concentrated' in a dedicated gallery (e.g., City Life, which also offers a valid commercial offer outside the shopping centre).</p><p style="text-align: justify;">In other cases (e.g., Porta Nuova), the commercial offer is 'scattered' and not concentrated in one place.</p><p style="text-align: justify;">We find the district 'organised' and perfectly integrated into its souls devoted to residences, offices, retail, food, entertainment, sports, and ample green spaces.</p><p style="text-align: justify;">Spending time in these contexts is enjoyable and rewarding for me, regardless of the quality of the commercial offer.</p><p style="text-align: justify;"><strong>Renovation of Shopping Centres in Urban Areas&nbsp;</strong></p><p style="text-align: justify;">This process of 'incorporation' into urban areas (to be managed in a unified manner) constitutes, in my opinion, the new evolutionary step of shopping centres, even if we cannot speak of an unknown phenomenon. Probably what changes is the scale of these interventions; here, the DNA of entire existing and, in most cases, very degraded urban areas are brought to new life.</p><p style="text-align: justify;">What of the many shopping centres (small, medium, and even large) often located in basins without an adequate primary area, which over time have 'regressed' and have difficulty developing a proper customer flow?&nbsp;</p><p style="text-align: justify;">Unfortunately, an irreversible 'involutional' parabola has begun (and, in some cases, is coming to an end).</p><p style="text-align: justify;">And one should not blame the pandemic but the (partial) galloping inflation because of the ongoing war between Russia and Ukraine. These projects' development results from short-term political logic, light years away from long-term urban planning.&nbsp;</p><p style="text-align: justify;">Nevertheless, the consequences will be severe because they will affect thousands of workers; moreover, the possibility of reconverting closed shopping centres will be 'hampered' both by the type of property and by long and complex urban planning procedures.</p><p style="text-align: justify;">The only hope is that many businesses will be able to move to exist or to-be-built business parks (but, again, the constraints and barriers to the construction of 'large sales facilities' will limit their commercial potential).</p><p style="text-align: justify;">However, I believe that retail parks can act as catalysts for retail activities that do not want to face the ordeal of declining shopping centres.</p><p style="text-align: justify;">Unfortunately, it is well known that evolutionary processes eliminate the weakest at the expense of the strongest.</p><p style="text-align: justify;">But it is good to think that there are also 'strong' shopping centres evolving for the better.</p><p style="text-align: justify;">In the future, they will undoubtedly be fewer in number but probably perform better in every respect by achieving the goals of the landlords, tenants and not most minor, the customers.</p><p style="text-align: justify;">This renewal process will go hand in hand with projects reviving large, unused, run-down urban areas. For the time being, there are not many, but the positive results will set an example to follow.</p><p style="text-align: justify;">Being able to think of shopping centres as bodies integrated into urban centres, rather than 'expelled' from them (as has been the case in our country for thirty years) represents a light at the end of the tunnel in which our market still finds itself.</p><p style="text-align: justify;"><span style="font-size: 10pt;"><em>This article was contributed by our expert <a href="https://www.linkedin.com/in/francescodellacioppa/">Francesco Della Cioppa</a></em></span></p><p style="text-align: justify;">&nbsp;</p><h3 style="text-align: justify;"><span style="font-size: 18pt;">Frequently Asked Questions Answered by Francesco Della Cioppa&nbsp;</span></h3><h2 style="text-align: justify;"><span style="font-size: 12pt;">1. What are the types of shopping Centres in Italy?</span></h2><p style="text-align: justify;">In Italy, there are more than 1,200 shopping centres throughout the Country.The total square metres of GLA are around 17,5 million. With 36,000 shops (7,000 of which are single-family operated), they record 2 billion admissions annually. The total turnover of the shopping industry is significant, with 139 billion euros accounting for 4% of Italy's GDP.</p><p style="text-align: justify;">From an employment point of view, shopping centres alone employ 590,000 people, without considering the allied industries they generate. Shopping centres emerged in Italy in the late 1970s. However, they were significantly hindered by political power as they were considered dangerous to the retail shops in city centres.</p><p style="text-align: justify;">Therefore, small sizes were favoured for at least 20 years, and shopping centres were relocated outside cities.The size of the centres has increased in the last 15 years, and their location is closer to large cities. This situation has put many shopping centres in crisis, whose size and location no longer allow them to be profitable.</p><p style="text-align: justify;">In Italy, more than 80 per cent of shopping centres are smaller than 20,000 square metres of GLA. While medium and large centres do not exceed 12% of the total GLA in our Country.</p><h2 style="text-align: justify;"><span style="font-size: 12pt;">2. What is the driving force for the evolution of the shopping centre species?</span></h2><p style="text-align: justify;">Few shopping centres are integrated into urban contexts, especially in Italy, thanks to political obtuseness.&nbsp;</p><p style="text-align: justify;">If we look at the development of shopping centres, small schemes were favoured, which then inevitably went into crisis over the years, and shopping centres were relocated away from town centres. A kind of 'reverse' development created the conditions for the involution of a significant percentage of this market, which is today fragmented and weak.</p><p style="text-align: justify;">At the same time, we see a significant evolution as in recent years, the development of retail formats has been integrated within completely redesigned urban areas, coexisting with offices and residences, an exciting and positive evolution.&nbsp;</p><h2 style="text-align: justify;"><span style="font-size: 12pt;">3. How will shopping centres change in the future in cities and towns?</span></h2><p style="text-align: justify;">Within these redeveloped urban areas, we see the evolution of the 'shopping centre' species; a small percentage of projects but full of added value for those who can 'experience' them.</p><p style="text-align: justify;">In some cases, this integration still envisages the shopping centre as a single entity embedded in the urban connective tissue. As a result, the commercial offer is often &lsquo;concentrated' in a dedicated gallery. In other cases, the retail offer is 'scattered' and not concentrated in one place.</p><p style="text-align: justify;">We find the district 'organised' and perfectly integrated into its souls devoted to residences, offices, retail, food, entertainment, sports, and ample green spaces.</p><h2 style="text-align: justify;"><span style="font-size: 12pt;">4. How beneficial is the redevelopment of the shopping centres?</span></h2><p style="text-align: justify;">This process of 'incorporation' into urban areas (to be managed in a unified manner) constitutes, in my opinion, the new evolutionary step of shopping centres, even if we cannot speak of an unknown phenomenon. Probably what changes is the scale of these interventions; here, the DNA of entire existing and, in most cases, very degraded urban areas are brought to new life.&nbsp;</p><p style="text-align: justify;">In the future, they will undoubtedly be fewer in number but probably perform better in every respect by achieving the goals of the Landlords, Tenants and not most minor, the Customers.</p><h2 style="text-align: justify;"><span style="font-size: 12pt;">5. Will retail parks undergo redevelopment?</span></h2><p style="text-align: justify;">I believe that retail parks can act as catalysts for retail activities that do not want to face the ordeal of declining shopping centres. The size and the number of schemes will increase in the future.</p><p style="text-align: justify;">&nbsp;</p>