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Paris-based Unibail-Rodamco-Westfield (URW) \u2014 the shopping center powerhouse best known for its Westfield-branded malls \u2014 threw open the doors to its latest mall development last month. Nothing unusual about that, but as it made its debut, the question is whether it will be the last new ground-up mall in Europe, for URW or any of the other major developers.<\/p>\n\n\n\n
And hot on the heels of Hamburg, the company also announced a major deal to expand its brand in the Middle East\u2019s hottest market, Saudi Arabia. The sands of time certainly feel like they are moving eastwards. <\/p>\n\n\n\n
Indeed, gone are the days when property investors vied to snap up space for retail-led city center schemes or to construct out-of-town super-regionals because Europe is seemingly done when it comes to new shopping emporiums. <\/p>\n\n\n\n
Post-pandemic there have been few big developments: URW\u2019s own Mall of the Netherlands scheme in The Hague; the St James Quarter in Edinburgh, Scotland and the redevelopment of the iconic Battersea Power Station in London come to mind. But each of those had a rationale specific to its location.<\/p>\n\n\n\n
Instead, the most interesting deals over the past 12 months have seen Swedish furniture retailer IKEA\u2019s property arm acquiring centers in Brighton, Paris and Munich, while Norway\u2019s powerful sovereign wealth fund has been busy in the UK and bought out the remaining stake in Sheffield\u2019s huge Meadowhall development and upped its holdings in Covent Garden. Another property giant, Landsec, acquired LiverpoolOne, while US investor SVP bought Ireland\u2019s biggest mall, Blanchardstown, on the outskirts of Dublin.<\/p>\n\n\n\n
For its part, the 4.5-million-square-foot Westfield Hamburg-\u00dcberseequartier sits at the heart of the huge HafenCity urban redevelopment on the river Elbe in German port city Hamburg. It is the new, shiny centerpiece of a huge residential and office development that has helped redefine the city, and includes dining and leisure, apartment blocks, offices, three hotels and a new cruise terminal, all connected to the city via its own subway station. <\/p>\n\n\n\n
The shopping center opened at near capacity with a third of the 130 retailers taking space new to the city, plus an additional 40 food and beverage units. Around 85,000 people swarmed to the opening and more than 1 million visitors flocked to the center in its first two weeks. <\/p>\n\n\n\n
Although the German city authorities were keen for the mall to be open-air, URW argued that the winter climate made a covered center more practical and the two parties compromised on a two-level mall with large windows and skylights, plus an striking roof design and an emphasis on natural light.<\/p>\n\n\n\n
\u201cI believe our shopping centers have a very important role attracting people to regenerate surrounding areas,\u201d URW Chief Strategy and Investment Officer Vincent Rouget said as he stressed that the mall has brought a vibrancy to the wider regeneration that was previously missing.
\u201cAmbitious projects inevitably stretch over a very long time, while I think the pace of change is ever increasing. It’s a project that started in 2014, more than 10 years ago, and we wouldn’t conceive it in the same way today,\u201d Rouget added, as he speculated that the next generation of the company\u2019s development program is more likely to focus on using its existing retail centers in Europe and the US as the catalysts for wider regeneration.<\/p>\n\n\n\n
URW still operates 15 malls in North America \u2014 despite at one point plotting to exit the country \u2014 including Westfield Century City in Los Angeles and Westfield World Trade Center in New York, and it has been selling off a number of assets in both Europe and the U.S. to fund investment in those malls it has retained.<\/p>\n\n\n\n
In a surprise move, it also signed a deal on May 5 with Cenomi Centers for a strategic and franchising partnership within Saudi Arabia. Under the terms of the 10-year partnership, which includes an option to extend for an additional 10 years, Cenomi Centers will exclusively license the Westfield brand from URW within the Saudi shopping center market.<\/p>\n\n\n\n
The deal sounds like a win-win for both parties. Cenomi Centers, listed on the Saudi Exchange as Arabian Centres Company SJSC, is a major regional owner, operator and developer of shopping centers, with an existing portfolio of 21 assets located in 10 major Saudi cities, and an ambitious development pipeline.<\/p>\n\n\n\n
The partnership will focus initially on flagship destinations in the three largest Saudi cities of Jawharat Jeddah, Jawharat Riyadh, and Nakheel Dammam, and will eventually include up to eight of Cenomi Centers\u2019 malls.<\/p>\n\n\n\n
But the opening of Hamburg and the deal in Saudi Arabia also suggest a wider story. The death of retail in Europe was wildly overstated amid the online hyperbole of the pandemic years, but retail development across the continent might be all but done. Europe\u2019s better malls are in good health, but there is little need for new retail space. Look east, however, and Saudi Arabia offers huge potential right now as the country\u2019s rulers attempt to shift its economy away from energy domination.<\/p>\n\n\n\n
URW has built perhaps the only globally recognized mall brand with Westfield\u2014and as new mall development slows, the power of that brand only grows.<\/p>\n