Profile: Centros
Published: 20 July, 2009
Centros has made big strides forward on two major projects in recent weeks. Last month it was selected to partner Anglo Irish Bank in resurrecting the 500,000-sq ft Trinity Walk scheme in Wakefield after the collapse of original developer Modus. And this month it was confirmed as the City of York’s development partner on the Castle Piccadilly site, along with LaSalle UK Ventures.
Wakefield is probably the first case of a shopping centre project stalling mid-way through construction since Sibec abandoned the Pyramids in Birkenhead with the steel frame barely completed almost 20 years ago. The collapse of Modus forced the contractors off site and left the scheme’s funder, Anglo Irish, with a dilemma: sell out at a loss or find another developer to finish the job and hope for a profitable sale further down the road?
KPMG tested the market for the bank, and advised the latter option, signalling a scramble among developers for the project. Centros, with its track record of delivering projects and of handling sensitive issues at a local level, emerged victorious.
Centros chief executive Richard Wise is naturally delighted at the unexpected opportunity. “All my construction guys have huge smiles on their faces,” he says. “They’re actually going to be building something.”
But what they’ll be building is not yet clear, as the Centros team is busy reappraising the project. “Modus was unfortunate, but a lot of what they proposed was right,” insists Wise. “What happened was not a reflection on the project.” But he adds: “It’s a six-year-old design. It’s a bit too big and it’s not necessarily configured the way we would like. The redesign will only take a matter of weeks or months but we need to establish which bits we prioritise and which we leave until later.”
However he insists that this will not lead to major delays. “The project is unique in that all the upfront work’s been done,” he says. “The site’s cleared; the new road system’s in operation and the steelwork’s just begun. It needs some reworking but we can be back on site very quickly.”
Looking ahead, Wise has a lot of faith in the project. “We found the city’s bigger than you might expect and it has more money than you’d think,” he says. “We like the catchment and, importantly, the retailers are positive. They think that if they had the right accommodation in the right scheme they could make money.”
And he adds: “AIB needed to manage their way out and that’s becoming a common theme. They’ve invested a lot of money in a good city: the fundamentals are strong and it was definitely the right decision not to sell in the current market.”
So does he think Centros will be in a position to come to the rescue of more troubled projects? “I’d like to think more opportunities like this will come along but I’m not sure they will. There is a very small number of schemes actually on site and a very small number where the fundamental work has all been done,” he notes.
Added to which, he forecasts that this lack of supply is going to become even more of a problem in the future. Centros’ own Northern Quarter project in Portsmouth is a case in point: the developer has reluctantly concluded the development is not viable, so it is looking to reconfigure its plans, but this will require a new planning application.
As Compulsory Purchase Orders (CPOs) are tied to a specific planning consent, once consent is granted for the new scheme, the entire CPO process will have to be reopened once again.
“If we can’t speed up the planning process or extend CPOs it’ll take six or seven years just to get back to where we are now,” he warns. And this is not just bad news for the development industry. “Retail is constantly changing, and if retailers are denied opportunities to add to their portfolios they’ll stagnate.”
And Centos encountered yet another form of delay in York, where it has just been confirmed as developer of the Castle Piccadilly site. Two years ago Centros and LaSalle bought the Coppergate centre from Land Securities, after the property giant grew frustrated with a decade-long battle to extend the scheme.
However, because the land for the extension was council-owned, the purchase no longer gave the new owners the automatic right to carry out the development. After the Roanne judgement in the European court, all such opportunities involving public assets now have to go to open tender.
Almost two years on, the council has finally been able to confirm the original team. “We’re pretty relieved it’s come to an end,” admits Wise. “There are some towns and cities – admittedly few in number – where in the current climate regeneration could work provided it’s off the right numbers, and York is one of them.”
All the statistics show York is suffering massive leakage of retail spend. “They get in their cars and head off to Leeds, Hull and even Harrogate,” Wise observes. “This is sucking the expenditure out of York, and the challenge for the council is can they make it into something more than a tourist attraction?”
But despite its potential, the site has challenges, wedged as it is between the river and a main road and containing a scheduled ancient monument, Clifford’s Castle. With this in mind the LaSalle/Centros team has brought in iconoclastic architect Piers Gough. “He looks at things in a different way,” says Wise. “It’ll be a long haul, because of what it is, but I’m hopeful we can get the public consultation going in the right way.”
