That will bring the total up to seven, and that is just the big ones. Are there enough new clients to support the new centres, or will they simply ‘steal’ from each other.
One undeniable fact is that they are all of a very high quality, both in terms of design and maintenance. Each one represents multi million euro investment, so clearly their investors and managers see a market for each of them. Monthly fees charged by the managers to each retail outlet are a closely guarded secret, but thought to be in the region of 20 percent. This is to cover the cost of maintenance, cleaning, publicity and all the services that keep the centre to the standards we all enjoy. These fees will undoubtedly be negotiable, especially with so many centres fighting to bring in a good range of retail shops and food outlets.
A well known international real estate commercial investment company told me that the ‘rule of thumb’ was that they based all their figures on a catchment area of twenty minutes to travel to get to the centre.
I am not sure I agree with that. I believe many of us travel up to thirty minutes or more to get to one we like, or one that has what we are looking for. We all happily travelled much further when the first major commercial centres opened. It wasn’t Guia as many think, in fact Forum Algarve (Faro) beat them by one month. They opened in March 2001 and Guia opened in April 2001.
The problem is, as many readers point out, you find most of the same stores in each centre. The main ‘attraction’ is a major brand supermarket, and they can vary from one centre to another. Others rely on a cinema complex. The Mar centre have the unique feature of an IKEA store, very popular whatever you might think about their furniture. They also added a ‘designer village’, an outlet centre for major fashion brands.
Parking is an issue
Car parking is a big issue. Centres with underground parking have quite a big advantage. Your car won’t boil in the sunshine and you won’t get wet while getting to the shops if it’s raining (it does rain sometimes, even in the Algarve). In the UK shopping centres, managers are hotly debating whether they can charge for parking. I read a recent report from a conference supported by NCP (National Car Parks) who argue that by charging, the car parks will be better run and create more profit for the managers. I know of one shopping centre in Lisbon where you pay for parking but thankfully that idea has not caught on in the Algarve. With so many centres fighting for your custom, it seems unlikely to be an idea that catches on here.
Take claims about size with a pinch of salt
The claim to be the largest commercial centre (or retail park) is used by most centres. What are the facts? The Mar centre near Faro has over 120 stores plus a factory outlet with the addition of a retail outlet park which bolsters their claim to around 150 outlets.
The Aqua Shopping Portimão is a large, modern 120 store shopping centre in Portimão with large underground car park for 1,800 cars.
Tavira Gran-Plaza claims to be the first major shopping centre in East Algarve. They have 120 stores.
The new Sudoeste (Southwest) Retail park which opened earlier this month in Alcantarilha, proudly boats to be the ‘The largest retail park in the Algarve’. They appear, in fact, to have 19 stores. It’s a very attractive park, but it’s probably in reality one of the smallest.
The new Nova Vila Retail Park and should open its doors in Portimão in 2023. It situated where the major fire destroyed the whole park in 2012. It is a project promoted by the Mitiska REIM group, a European investor in the convenience real estate segment, and will have about 22,000 square metres of shopping space spread over 18 stores.
Jan Du Bois, Investment Director Iberia at Mitiska REIM, explains that although the retail sector faces a series of challenges, there is still a high demand for retail parks by retailers and consumers.
Will El Corte Inglés open in the Algarve?
Persistent rumours from major commercial property agents claim that El Corte Inglés is negotiating for a possible presence in this park. This is not a new rumour and although the Algarve must be on El Corte Inglés short list for their next outlet, I would personally have my doubts if it would be in Portimão.
That raises the obvious question, where are all the clients coming from, more to the point where are all the stores, let alone the staff that they will need be coming from? There is already a shortage of staff, walk around any of the existing shopping centres and you will see signs up in many stores looking for staff. It’s also noticeable that several stores are closed, the shopping centres are very good at disguising this, but just look for yourself. Are stores moving to other centres?
Now those same shops will have yet another centre seeking to sell them retail space. In most cases, it’s the same brands. Portugal is in a state of slow recovery, but wages are still quite low, is there enough available income to make all of these centres profitable. I have serious doubts. I admire their optimism but doubt their grasp on reality.
Support the high street
Sadly, the people who suffer are the ‘high street’ stores. Small privately owned shops that offer unique products and great service How will they survive? The UK experience is that they won’t, and we will be the losers. A friend recently told me that she needed a dress for a wedding but wouldn’t go to any of the shopping centres as she would probably end up wearing the same dress as someone else. She went to the Portimão shopping street, once a thriving street of private shops with their own products.
Are commercial centres a threat to shops with their own identity and service standards, are we all being brain washed into using mass market shops, found in almost every shopping centre?