Retail Revolutions

Retail Revolutions
Spotlight on Community shopping centres

28 June 2017, by Tom Whittington

What is a Community shopping centre?



Community shopping centres are locally dominant retail locations which focus on delivering affordable and convenient retailing. They are typically in town centre locations and provide a range of civic amenities and essential services that go beyond retail.

The mix of uses and range of shops, with a strong emphasis on Convenience and Value goods, encourages high frequency visits and access to retail that is accessible and convenient, fitting into busy everyday lives for millions of people.

This research highlights that this local needs-based shopping also generates surprisingly high basket spend at an average £36 per visit. Community shopping centres compete less with other shopping centre destinations, rather they feed off an immediate catchment within a 20-minute drive time.

The core proposition of a Community shopping centre is offering immediacy and value to local people. This purpose based shopping is ingrained across geography and socioeconomic groups and highlighted by the fact that 78% of shoppers visit at least one a week and that 95% are satisfied customers who found what they came for.

Different to Secondary

The purpose and function of a Community shopping centre is very different to that of a larger Secondary shopping centres that rely upon attracting comparison shoppers from a far greater catchment. Secondary schemes rely upon a broader range of retailers and have to offer a higher degree of 'experience'. The shopper has typically travelled further and their shopping trip is based on 'want' not 'need'.

Scope of the Market

There are c.220 Community shopping centres nationally. It is a relatively liquid market, from 2011 to 2015 there were 128 Community shopping centre trades with an aggregate value of £3.9bn.

The majority of Community shopping centre are privately owned. Ellandi are the largest manager in the sector with New River being the only REIT with a large Community shopping centre portfolio.

What are the key benefits to investors?

Community shopping centres offer high yields, in absolute terms and by comparison to prime shopping centres, with a yield spread of c.400bps. They are also considerably cheaper on a capital value £sq ft basis.

Most rents have been rebased and are now low, by historic standards. They are affordable to retailers who generate strong effort ratios in good Community locations. The 2017 business rates revaluation reduced rateable value for most Community shopping centres further reducing occupational costs for retailers.

Occupancy figures are typically strong. Ellandi’s stabilised assets operate at 95% economic occupancy rate, comparable to prime centres.

Collectively, these factors contribute to strong and sustainable rental income flows that can offer higher yields than other mainstream property asset classes. As operating assets, Community shopping centres offer scope to add rental and capital value through active asset management, bringing with it sustainability of income for the investor.


Key Contacts

Tom Whittington

Tom Whittington

Retail Research


+44 (0) 161 244 7779


Subscribe to Savills research


Would you like to be notified via email about new research?