Insights from across markets
Shopping Centres – A Two Tier Retail Resurgence: Why the Future Belongs to the Best and the Boldest
To mark the end of his graduate rotation at Deutsche Hypo – NORD/LB Real Estate Finance in London, Edward Roberts takes a closer look at a rapidly evolving part of the UK real estate market – exploring how evolving demand dynamics could support a meaningful repositioning for secondary shopping centres.
The phrase “retail is back” is something that we’ve been hearing for so long now that it hardly qualifies as a page turning opening line. Yet one of the themes that has received surprisingly little attention in discussions on the resurgence of UK retail is the varied forms shopping centres may be forced to adopt if they are to sustain their renaissance and escape the woods for good. What is becoming clear is that for top-tier centres this path is more straightforward – for the secondary market, it is increasingly apparent that only a bold repositioning will ensure their sustained relevance. The key to realising this potential could lie in an unlikely place: Gen Z. As a self-confessed “Zoomer”, I want to lift the lid on why we may present a unique opportunity for secondary shopping centres to tap into.
Last year, shopping centres and food stores jointly led the commercial real estate sector, each delivering a 10.2% growth in returns (Knight Frank, 2025). But beneath the headline performance lies a widening divide: the best centres are trending toward full occupancy, while secondary centres continue to struggle to attract tenants. The market is effectively bifurcating into destination assets and reinvention candidates, creating the foundations of a multi‑speed retail landscape. Whilst this does not appear to be a dynamic that is showing signs of relenting any time soon, I am not convinced by the idea that this trend is one that will inevitably consign mid-tier centres to an early grave.
Since the “perfect storm of imperfections” that retail faced during the Covid‑19 pandemic – combined with the subsequent rise in e‑commerce – shopping centre managers have been forced into a period of reinvention: adapt and evolve or remain as they are and drift toward obsolescence. Predictably, in a cautious market, it has been the largest and most prime assets that have been best placed to capitalise on the green shoots of this retail renewal. Through the curation of more engaging and experience‑led environments, high-quality centres have been able to re‑connect with consumers, driving much‑needed increases in footfall and spend.
Secondary centres, however, have not enjoyed the same licence. In this sub‑market of underutilised assets, investors are increasingly exploring more radical alternatives to unlock value. One strategy gaining traction is the transformation of centres into mixed‑use hubs incorporating entertainment, healthcare and residential components. This multifunctional approach has the potential to reimagine many secondary centres as developments closer in spirit to “walkable urban villages.” While I appreciate this may sound like a utopian ideal picked straight out of an Iain Banks novel, there is an argument to be made that the time for this abstraction to become reality is now.
Research by American Express and Trajectory (2025) shows that Gen Z – a demographic in which 76% expect an AI‑driven, immersive shopping experience – will soon represent the largest share of destination‑using customers. This generation, renowned for navigating life through a digital‑physical paradigm of immediacy, may serve as the perfect catalyst of demand for these new forms of secondary centres.
Imagine a shopping centre where people can live, work, and relax in situ – an environment seamlessly supported by a fusion of community‑driven spaces and smart technology that curates personalised experiences capable of anticipating shoppers’ needs before they even articulate them. Enter Gen Z. Their expectations around innovative retail environments help explain why, when managed effectively, mixed‑use centres hold immense potential not only to revitalise a stranded segment of the retail sector but also to reshape how people interact with spaces of consumption for good.
Ultimately, whether one can be persuaded by the idea of mixed‑use centres and AI “precision targeted marketing” or not, the fundamental point remains. In whatever shape they take, secondary shopping centres have a genuine opportunity to secure their place in this new era of bricks‑and‑mortar retail – provided they are bold enough to capitalise on shifting demand dynamics whilst differentiating themselves meaningfully from their larger and more competitive older siblings.
This text is part of our Spotlight series, highlighting perspectives from across our teams and markets at Deutsche Hypo – NORD/LB Real Estate Finance.