Europe; development...

More than 17 million square meters, or 182.9 million square feet, of new shopping-center space is expected to open in Europe by the end of 2008, up from just 5.8 million square meters last year, according to real-estate advisory firm Cushman & Wakefield Inc. (These figures exclude extensions to existing centers.)

Growth is being driven by the push on the part of retailers such as France's Carrefour SA and Germany's Metro Group AG into emerging markets, such as Turkey, where good quality retail space is still in short supply. In addition, retailers are expanding into smaller cities across Europe, which has a total of 97 million square meters of shopping center stock.

Spain boasts the biggest retail development pipeline for the next two years, with 1.93 million square meters. "There are still a lot of opportunities in Spain; the retail market is still very active," says Sharon Fernández-Cavada King, head of pan-European retail at real-estate advisory firm DTZ, based in Madrid.


Spain has one of the highest concentrations of shopping centers in Europe, with 234.5 square meters per 1,000 inhabitants, according to Cushman & Wakefield. This compares with an average among the European Union's 27 members of 176.4 square meters. However, this is still lower than Norway, which leads with 627.8 square meters, and Sweden, with 344.2 square meters. Elsewhere in Europe, United Kingdom shoppers have to make do with 237.7 square meters, compared with 218.8 square meters in France and just 144.4 square meters in Germany.


Also, given the need to secure quality anchors, big retailers, such as Inditex Group or Cortefiel Group, are often able to negotiate very favorable conditions. These include low rents -- up to 50% less than other tenants -- because of their ability to attract consumers to a center, he says, adding, "If one of these flagship retailers decides to reorganize its portfolio by closing the less-productive units, there could be trouble."

The slowdown in the Spanish housing market, which triggered a slump in Spanish real-estate stocks last week, may start to fan out to consumer spending, particularly if recent house price falls in certain areas of the country become more widespread, says Mr. Clemente. It has been estimated that Spanish homes could be overvalued by 20% to 30%, which could see cautious consumers tighten their belts.

Poland comes in just behind Spain, with 1.88 million square meters of new retail space set to open by the end of next year.

One major center opening in Poland this year is Zlote Tarasy, which means "Golden Terraces." Developed by Dutch real-estate group ING Real Estate at a cost of €500 million ($682.4 million), the 225,000-square-meter mixed-use center in central Warsaw includes a 63,500-square-meter shopping center, which opened in February. Tenants include U.K. retailer Marks & Spencer PLC, Hugo Boss and Spanish fashion chain Zara, which is part of the Inditex Group. The cinema and offices will be completed by August.

Emerging markets, such as Turkey and Russia, are also going to be big winners, with 1.65 million square meters and 1.07 million square meters in the pipeline, respectively.

"There is such an undersupply of shopping-center space in these countries, which is what is driving the development pipeline. More international retailers are also moving in," says Neville Moss, head of European retail research at Jones Lang LaSalle in London. Retailers such as Ikea AB, Metro Group and Carrefour all have a presence in Turkey. Ikea and Metro Group are also active in Russia, with Carrefour planning to open its first store in Russia next year.

Burgeoning consumer spending in both markets in the wake of strong economic growth has caught the eye of retailers and developers alike.