UK Shopping Centres in 2025: Investment Opportunity or Ongoing Challenge?
This article was first published in Property Investor News, May 2025
It wasn’t long ago that the term “shopping centre” conjured up images of bustling high streets under one roof — anchor stores pulling in crowds, food courts full to the brim, and packed car parks on Saturdays. These were the ‘glory days’ of shopping centres, and a world that I was very much part of when I was a director at Land Securities managing a large shopping centre portfolio.
Fast forward to 2025, and the picture looks very different. Many shopping centres, especially in secondary and tertiary towns, are grappling with a harsh reality: declining footfall, struggling tenants, and questions over their long-term viability.
Yet paradoxically, for commercial property investors willing to look beneath the surface, this very disruption is creating real opportunity. Secondary shopping centres are cheap — sometimes very cheap. But does that discount represent untapped potential, or a value trap?
As always in commercial property, the answer is nuanced. There’s money to be made — but not without caution, creativity, and a clear understanding of what makes shopping centres viable today.
The Shopping Centre Reset: What’s Changed?
The headline figures make stark reading. Research from JLL (2024) shows that UK shopping centre capital values have fallen by over 35% since their 2016 peak. Secondary centres — those smaller, regional malls without a strong tourist or commuter base — have been hit hardest. The Savills 2024 Retail Outlook report noted that some UK shopping centres were changing hands for as little as 10% of their development costs.
There are several reasons why:
- Online Shopping: E-commerce continues to grow. Even post-Covid, many consumers never returned fully to physical retail.
- Experiential Shift: Shoppers now want more than just products. They’re seeking experiences, leisure, dining, entertainment — things you can’t replicate online.
- Over-Retailing: Many UK towns simply have too much retail space. According to Savills (2023), Britain still has 30% more retail floor space per capita than many European peers.
- Changing Demographics: Younger consumers are less brand-loyal and more experience-driven. Traditional department stores and “copy-paste” mall layouts no longer cut it.
And yet, despite the headwinds, some shopping centres are not just surviving but thriving. Why? Because they have adapted fast.
What’s Working in 2025?
Successful shopping centres today share some clear traits:
- Experiential, Events-Led Offerings
The best centres are no longer just places to buy — they’re places to be. Hammerson, one of the UK’s largest shopping centre owners, reports that its most successful sites have shifted towards 30-40% leisure and food & beverage by floorspace. Examples include indoor markets, pop-up exhibitions, gaming venues, and curated local events. Centres like Liverpool ONE, have seamlessly integrated culture, experience, and retail to create all-day dwell time — and rising footfall. The Westfield Group reported that centres with over 25% of floor space dedicated to experiential offerings have seen footfall recover to 105% of pre-pandemic levels, while those with less than 10% experiential space remain at approximately 78% of historical footfall. - Service-Driven Occupiers
Pure retail is risky. But service-led tenants — think gyms, dentists, opticians, hair salons, co-working hubs, health clinics — are booming. They’re Amazon-proof, footfall-positive, and sticky. Centres that pivoted early to a broader service mix are now reaping the rewards. A Revo 2024 survey found that centres with more than 40% of units occupied by service-based tenants reported vacancy rates below 8%, compared to the national average of 14.2%. - Mixed-Use Integration
More and more centres are adding residential, office, or hotel elements. It’s not just about shopping — it’s about creating a living, breathing district. The idea is simple: more uses equal more reasons to visit, and therefore more resilience. For example, the former Debenhams in Manchester’s Trafford Centre has been redeveloped into a leisure and event hub, while Hammerson is converting parts of its centres into Build-to-Rent apartments. - Community Anchors
Centres that genuinely engage with their local communities — through pop-ups, local food vendors, farmers’ markets, social events — are building loyalty that national brands alone can’t command.
The Investment Case: Why Bother?
Because so much of the secondary shopping centre properties on the market look SO cheap it is attracting interest from investors – even SME investors. So why are some investors (quietly) getting interested in shopping centres again?
- Price Adjustments: Some centres are trading at up to 70% discounts from peak valuations. The yields — if you can stabilise occupancy — can be extremely attractive.
- Limited Competition: Institutional investors, once dominant in this sector, have largely pulled back. That leaves room for entrepreneurial, opportunistic investors to pick up assets with less competition.
- Government Support: Whilst funding is dropping, the UK’s “levelling up” agenda and high-street regeneration funds have been pumping money into town centres. Some shopping centres may benefit from associated public realm upgrades.
- Alternative Use Value: Even if full retail recovery isn’t viable, some investors are unlocking alternative uses — logistics, last-mile delivery hubs, residential conversions, or leisure complexes. According to Knight Frank’s Alternative Use Study (2024), approximately 28% of the UK’s shopping centre stock has medium to high potential for residential conversion, particularly in locations where residential values exceed £350 per square foot.
But Proceed With Caution
This is not a rising tide that lifts all boats. Investors must tread carefully.
- Structural Vacancy: Centres that lost anchor tenants like Debenhams, House of Fraser, or Topshop still have gaping voids. Re-letting large units is hard.
- Big Boxes Are Hard to Repurpose: Shopping centres are designed around retail. High ceilings, deep floor plates, enclosed environments — these features are costly (and difficult) to reconfigure for alternative uses. Multi-level centres with poor vertical circulation, excessive overall size, or awkward configurations present substantial redevelopment challenges. Single-level centres with flexible layouts and good access typically offer better repurposing potential.
- Capex Heavy: Transforming a centre into an experience-led, mixed-use asset isn’t cheap. Investors must be ready for significant refurbishment and re-tenanting costs.
- Local Demographics Matter: Success depends heavily on catchment areas. Centres in economically weak areas, or with shrinking populations, may struggle regardless of repositioning. The Local Data Company’s 2024 analysis found that shopping centres in locations with above-average population growth showed vacancy rates approximately 5.2 percentage points lower than those in areas with declining populations.
- Management Intensive: The new model shopping centre isn’t a “set and forget” asset. It requires hands-on leasing strategies, marketing events, community engagement, and ongoing innovation.
What to Look For
The investment case for UK shopping centres in 2025 appears polarised. For brave investors with operational expertise and realistic expectations, certain centres offer genuine value opportunities, particularly where:
- Acquisition costs sit at 10-25% of replacement value
- The physical configuration allows for flexible repurposing
- Location fundamentals remain sound
- The size is manageable (sub-300,000 sq. ft. centres typically offer better prospects than larger facilities)
- Nearby residential values support potential mixed-use conversion
However, investors should approach with caution. The sector’s challenges remain structural rather than cyclical. Even at dramatically reduced prices, many centres will struggle to generate sustainable returns without fundamental reimagination.
The capital expenditure requirements for transforming outdated centres should not be underestimated. Successful repositioning typically requires investment equal to or exceeding the acquisition cost, making the apparent “bargains” potentially less compelling. Importantly – buy at the right price. In this sector, your entry price is everything.
Final Thoughts
UK shopping centres in 2025 present a market of extremes. Prime, well-positioned centres that have successfully evolved into mixed-use, experience-led destinations continue to perform strongly. At the other end, secondary and tertiary centres trading at distressed prices offer potential opportunities for investors with the vision and operational expertise to implement fundamental change.
The key to successful investment lies in seeing beyond traditional retail metrics. The most promising opportunities are not those that can recapture retail’s glory days, but rather those that can be transformed into relevant, mixed-use destinations that serve their communities in diverse ways.
For investors willing to undertake this complex challenge, certain shopping centres represent one of the few genuine value propositions at the moment. However, this opportunity comes with substantial risk, requiring both financial resources and specialised expertise to navigate successfully.
The shopping centre is not dead, but it is evolving into something fundamentally different – less retail-centric, more experience-focused, and increasingly integrated with other uses. Those who can facilitate and capitalise on this evolution may find significant rewards in a sector many have written off as obsolete.
