ULI / JLL Report: Food and Beverage and Leisure Sectors Play Crucial Role in Keeping Shopping Centres Competitive

CANNES (16 November 2016) – A new report from the Urban Land Institute (ULI) and JLL finds that food and beverage (F&B) and leisure offerings are essential to the success and future competitiveness of shopping centres. Entitled Ingredients for Success: How food, drink and leisure keep shopping centres competitive, the report finds that retail sales in a sample of shopping centres analysed for the study increased by 6.2% in the last 12 months with the addition of leisure and F&B, with retail sales per square metre growing by 1.2% in the same time period.

The report is informed by the financial analysis of eight shopping centres in Europe that had recently upgraded or extended their centres to include additional leisure and F&B. In addition, it draws on insights from interviews with industry experts on retail trends, as well as a survey of ULI Europe’s Retail and Entertainment Council members.

“While the move toward F&B and leisure began as a defence against e-commerce, these sectors are now essential to meeting the evolving needs of customers,” said Marije Braam-Mesken, Chair of the ULI Europe Retail and Entertainment Council. “The shopping centres that made significant investments in these sectors have seen a halo effect, which is a first indication that F&B and leisure are contributing to overall performance.”

“Shopping centres are developing more and more into hubs that embrace the broader lifestyle needs of communities,” said ULI Europe CEO Lisette van Doorn. “This report gives an initial glimpse into the positive impact of these lifestyle elements on the success of shopping centres.  We hope to undertake future research as shopping centres continue to evolve.”

Along with contributing to the uptick of retail sales in the shopping centres analysed, leisure and F&B showed strong increases in estimated rental value (ERV) growth and minimum guaranteed rental (MGR) growth at 15.8% and 11.3% in the last 12 months, respectively. These results point to the contributions that leisure and F&B make to overall performance. Interviewees reported that valuers no longer differentiate the sector’s contribution to yield compared with retail uses in shopping centres.

Overall, survey respondents saw both leisure and F&B as positive in meeting the shopping centres’ softer targets such as increasing dwell time—the time a consumer spends in a centre—and footfall. Footfall across the sample increased by 5% annually, a result that was viewed as positive against a general downward trend for the industry.

“We have witnessed for a number of years now the trend of increasing space dedicated to both F&B and leisure offers in shopping centres and how this reinforces place making and increases dwell time,” said Christian Luft, Director in JLL’s valuation team. “Through this project it has been possible to analyse data relating to shopping centres that have seen major F&B and leisure projects and to look at how this is impacting value.”

The report finds that F&B is perceived as an easier addition to shopping centres and more likely to contribute to a centre’s wider goals than leisure offerings, which are considered more complicated and a greater risk for centres taking on larger units at lower rents. However, this perception varied across Europe, with southern Europe, central Europe, and Turkey depending on leisure as a main driver for centres.

To download the report please click here.

About the Urban Land Institute
The Urban Land Institute is a nonprofit education and research institute supported by its members. Its mission is to provide leadership in the responsible use of land and in creating and sustaining thriving communities worldwide. Established in 1936, the institute has almost 40,000 members worldwide representing all aspects of land use and development disciplines. For more information, please visit europe.uli.org, follow us on Twitter, or join our LinkedIn group.

About JLL
JLL (NYSE: JLL) is a professional services and investment management firm offering specialized real estate services to clients seeking increased value by owning, occupying and investing in real estate. A Fortune 500 company with annual fee revenue of $5.2 billion and gross revenue of $6.0 billion, JLL has more than 280 corporate offices, operates in more than 80 countries and has a global workforce of more than 60,000. On behalf of its clients, the firm provides management and real estate outsourcing services for a property portfolio of 4.0 billion square feet, or 372 million square meters, and completed $138 billion in sales, acquisitions and finance transactions in 2015. Its investment management business, LaSalle Investment Management, has $59.1 billion of real estate assets under management. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit www.jll.com.