Grand design
Published: 15 October, 2008
The property industry could not have chosen a less auspicious time to deliver the biggest surge in shopping centre openings the UK has ever seen. At a time when the financial services industry is in meltdown and the wider economy is on the brink of recession, three schemes of more than a million sq ft are opening, along with a host of smaller schemes.
Against such a backdrop, it is remarkable that the new schemes have leased as well as they have. In every case developers have been able to claim that more than 90 per cent of their floorspace was let on opening day. But what they have been less willing to comment on was the level of incentives necessary to bring the retailers in.
In the longer term, though, it's the consumer response that is more important that incentivised lettings, and here there's been something of an arms race to see who can claim a million customers the quickest.
In Leicester, Hammerson and Hermes calculate that it took less than a fortnight for the millionth shopper to visit their Highcross scheme. Over 125,000 consumers, or a third of Leicester's population, headed to the new retail destination on opening day with the scheme also receiving 400,000 visitors by the end of its first weekend of trading.
With footfall up over 200 per cent year-on-year at the existing Shires Shopping Centre, Highcross appears to have achieved its aim of drawing shoppers from the wider Leicestershire catchment who previously shunned the city centre.
And not surprisingly this is having a dramatic impact on retailers. The flagship John Lewis store reported sales up 29 per cent on budget for the first full week with The Place To Eat 52 per cent up.
In Bristol, Land Securities and Hammerson's Cabot Circus welcomed its millionth shopper just 11 days after opening. The new £500m scheme attracted more than 120,000 on its first day and close to half a million by the end of its first trading weekend.
The new concept House of Fraser store has performed well with a total of 19,612 transactions and 26,333 units sold in less than a fortnight. The flagship Harvey Nichols, its first store in the South West, has also exceeded budget expectations and is continuing to trade on a high. On the second day of trading a queuing system had to be implemented outside the store to deal with the overwhelming number of customers.
Not surprisingly, the development tap has now been all but turned off with two more schemes due to open this autumn - Westfield London and The Centre in Livingston - and only two substantial schemes due to open in the whole of next year: Centros's arc in Bury St Edmunds and Land Securities' and Capital Shopping Centres' St David's 2 in Cardiff.
Westfield London is probably the biggest test of the market so far, in that it is breaking new ground. New malls tend to be grafted onto established retail locations, but Westfield London aims to create an entirely new retail destination.
At 1.5 million sq ft of retail and leisure the developer has taken great pains to ensure that the centre is accessible. With 60 per cent of customers expected to arrive by public transport there has been heavy investment in upgrading the local infrastructure: a new Underground station, called Wood Lane, is being built on the Hammersmith & City Line while Shepherd's Bush station on the Central Line has been rebuilt to cope with a massive increase in passenger numbers and renamed Shepherd's Bush Market. At the same time a new overground station, called Shepherd's Bush, has been built on the West London Line. And a new bus station in the south east corner of the site will form part of a major new transport interchange.
However, all this has still not been sufficient to reassure local councillors, who warn of gridlock on the local roads when the scheme opens on October 30.
Inside the centre, Westfield promises to take both the retail and catering offers of the traditional shopping centre to new levels with 265 retail units and 52 catering outlets. Top restaurateurs have been attracted to join the casual dining operators that have become the staple fare of new malls (see p3). In addition, Westfield has attempted to break more new ground in its retail mix by attracting luxury brands to The Village - which consists of around 200,000 sq ft, arranged across three levels.
In addition to the anchors Debenhams, Marks & Spencer and House of Fraser and the usual fashion majors, a host of smaller retailers are now fitting out including Build-a-Bear, Cards Galore, Coast, Fossil, G-Star, Hobbs, Oakley, Oasis, Phones 4U, Principles, Superdrug, The Body Shop, The Entertainer, The White Company, Vision Express and Warehouse.
This month also sees the completion of The Elements, Land Securities' new £130m extension to the Almondvale Centre in Livingston. And to coincide with the opening on October 16 the entire million-sq ft complex is to be renamed The Centre.
The new extension comprises three distinct areas: the new 375,000-sq ft Elements Square, anchored by Marks & Spencer and Debenhams, will house top retailers in an indoor shopping area with an outdoor feel. Brands signed up include H&M, River Island, Topshop, Topman, Dorothy Perkins, Passion for Perfume and Orange.
The Centre's new catering offer is split between two locations: the Wintergarden, overlooking Elements Square, and The Avenue, running between The Centre and Livingston Designer Outlet. Ask, Nando, Wagamama, and Chiquito have signed, and they will be joined by US ribs brand Tony Roma's.
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=== A boost for Bury ===
In Bury St Edmunds, Centros's development of the old Cattle Market site, now called arc, promises a new model for development in a market town.
The signature building at arc in is the 85,000-sq ft Debenhams store designed by Sir Michael Hopkins. The curved aluminium structure will form the retail focal point of the 265,000-sq ft development, which includes 35 other new shops, cafés and restaurants arranged around a new public square, and two open shopping streets. The scheme also includes 850 car parking spaces, 62 apartments and a multi-purpose public venue.Centros associate director David Lewis says arc is already 85 per cent let. The tenant line-up includes H&M, New Look, Next, River Island, Wallis, HMV, Costa, Vodafone, Crew Clothing, Fat Face and Waterstones. Other deals currently in solicitors' hands include Hobbs, Jane Norman, Swarovski and Blacks.
Lewis points out that arc has already lifted the tone of rents in the town from below £100 to £130 Zone A. Centros's letting agents are Jones Lang LaSalle, Mason & Partners and Knight Frank.
