Opening a shopping centre can be difficult at the best of times and it has proved to be particularly tough in the past two years, given the reluctance among retailers to sign up to new shops in the face of waning consumer and business confidence.

Multi, the Dutch developer backed by Morgan Stanley’s real estate funds, opened 10 shopping centres in 10 weeks around Europe this autumn – an impressive feat given that all have opened with a strong roster of tenants. But it is no surprise that the management of the company looks tired, if only from having to fly from city to city to shake hands with mayors, offer champagne to tenants and entertain local residents.

“It is difficult to imagine a harder time to open really,” says Glenn Aaronson, chief executive, following the party to launch its Istanbul shopping centre in November, the largest in Europe and the eighth on Multi’s launch schedule. “Even if you started today you would benefit from the beginning of the recovery.”

By then, the procession of openings, which have ranged from Bath in the UK to Palermo in Italy, was almost over. Most of the projects in the €2.4bn (£2.2bn) development pipeline were close to fully let on launch but there are few illusions that the malls reached the market at the best point in the cycle. As all developers who finished projects this year found, the problem with development is the time that it takes. Development can span many years, from piecing together ownership of a site and obtaining planning permission to actually building, and the market can change rapidly in that period. Letting property in a recession is far from easy.

Multi has been working on plans for some of the schemes launched this year for the best part of a decade. The launches this autumn were perhaps the last reminder of the development boom.

There are few signs that most banks want to start lending again to development, which is seen as risky, and little chance that developers would commit to speculative schemes without signs of tenant demand for the finished product.

Although development of a building that already has a tenant lined up can now get funding, some bankers warn that it could be years before they are prepared to supply the money needed for the big speculative schemes that many UK and European developers are considering. It is likely that many planning consents will quietly expire, particularly the more extravagant that could only have been viable in a booming market.

It has been tough for developers to find tenants willing to take new space this year, forcing rents reductions and incentive lifts. Land Securities and Liberty International opened the largest new shopping mall in the UK this year with about a third of shops empty, even with long rent-free periods.

Incentives have needed to be attractive. Opening half-full can be fatal for a shopping centre, which needs a healthy roster to attract shoppers, which then attract retailers at better rents in future.

However, there are signs that sentiment is gradually improving. At the annual MAPIC retail property conference in Cannes in November, developers were subdued, although most were more optimistic than earlier this year.

According to Jones Lang LaSalle, the outlook over the next six months for rents in Europe appears to have stabilised owing to limited availability of prime space, in spite of what it calls “the inevitable slowing of demand from occupiers”.

Multi’s perspective across the Continent is interesting, given that it now has operations in 17 countries. Mr Aaronson says that the portfolio has withstood the downturn well, but adds that it has been crucial to have the prime locations. He says that the most resilient market has been Germany, where the market never crashed as badly as elsewhere, while Spain has been the worst. Turkey, says Mr Aaronson, was starting to pick up again.

The Istanbul centre is almost full, with only 20 stores of its 265 outlets empty at its opening, but the impression from those involved was that it was not easy. Still, it welcomed 2m visitors in its first five weeks, so the customers appear happy.

There are few worries on future outlook. Levent Eyuboglu, managing director, pointed out that it can take two years for a centre to find its feet, and by then the market may be a very different place. “[But] there is no way that a public company could do what we have done – no way,” said Mr Eyuboglu.

Multi’s launch schedule is unlikely to be repeated for some time by any company, public or private. Even as conditions improve, there will be a lag that feeds through first to the retailers, then to the shopping centre owners who can start to believe about rental increases again. Only then does development start up again in earnest – and that, as Multi knows all too well, can take years to finish.

dan.thomas@ft.com

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