Bluewater in Kent
Profile: Lend Lease
Published: 27 August, 2009
Last summer, Lend Lease made two key appointments aimed at driving its UK shopping centre portfolio forward. Mark Boor joined as asset manager of the portfolio having previously been responsible for Prupim’s £9.5bn retail portfolio. And ex-DTZ agent Guy Thomas became head of leasing for the existing malls and for the development portfolio. Now, almost a year on, the new team is making its presence felt.
Any discussion of Lend Lease inevitably focuses on Bluewater. The north Kent megamall broke the mould for shopping centres when it opened a decade ago and it’s still hard to find a new centre opening that has a similar impact. “It really is a special place,” says Boor. “Every quarter we do a presentation to the investors and one of the highlights of that is always a report on retailer performance. It still has the highest sales densities in the UK after Heathrow and many retailers tell us that their Bluewater store is their best performer.”
And that outperformance seems to be continuing through the recession: in July, Bluewater experienced a 2.1 per cent uplift in sales against a national uplift of 1.8 per cent for non-food items.
Clothing drove the trend as apparel sales increased 3.3 per cent, with retailers reporting a strong demand for knitwear due to the poor weather, as well as formal fashion as shoppers bought items for summer events.
“Some sectors are thriving in the downturn,” says Thomas. “For instance jewellery’s doing well – people want a bit of a treat.”
Boor points out that Bluewater is often the first landing point for new retail brands such as Ted Baker and Urban Outfitters. Recently Hollister chose it for its first site outside London; Superdry took its first ever company-owned store and John Lewis opened its first food hall outside London, after a £20m refurb. And now George Davies’s GIVe is fitting out.
Although footfall at Bluewater is continuing to grow, hitting 27.5m last year, Boor concedes: “It’s going to need refreshing, because it’s ten years old. We’re looking at the tenant mix and the catering offer in particular.”
Loch Fyne has already taken the foodservice offer upmarket, and Bluewater is consistently its number one store in the UK. “Now we’re talking to the likes of Jamie’s Italian,” says Boor.
And now, more than ever, Lend Lease is trying to stay close to its retail tenants. “We think it’s very important to employ ex-retailers, who can talk to the retailers in their own language,” says Boor. “For example at the moment marketing budgets are under pressure as the service charge cuts begin to bite so we’re talking to the retailers so that we can work with them more closely on their own promotional activities.”
There is an existing consent for a new event space at Bluewater, beside the Water Garden catering area, but in the current climate Lend Lease is holding fire.
But what of the rest of the UK portfolio? “Generally, footfall’s down a bit, and sales are down although to a lesser extent,” notes Thomas.
“We need to know footfall numbers, but it’s conversion that really counts,” he says. “We use that data to plan our leasing programme, asset management activities and so on.”
Again, catering is increasingly a priority. For instance, the Old Market Square is emerging as a strong focal point for catering at Golden Square in Warrington, and Pizza Express has just taken a store in Touchwood, Solihull.
“We’re keeping up the pace of leasing, but we have to look for brands that add something to the mix. Overall, the volume of transactions is there,” Thomas says.
He says that at Touchwood vacancies went from zero to nine units but all the vacant space is under offer again. “By Christmas we should be full again,” he forecasts.
And Thomas doesn’t rule out the use of temporary lettings. For example, at Touchwood, Disney has taken a store on a short-term basis but sales figures are so strong that discussions are already under way on converting that to a conventional lease.
And Golden Square has eight or nine units under offer as well. For example Waterstones has just relocated within the centre, increasing its representation to 5,000 sq ft. And Half Price Jewellers is rolling out a new format in the centre.
“There’s a role for discounters in the current market, provided you have the right space in the right place,” Thomas observes, “but if we brought the barrier down across the board it would compromise the centre.”
“There are different ways of looking at it,” interjects Boor. “You don’t need to see a void as a hole in the centre – it’s an opportunity. For example at the Meadows in Chelmsford we worked with a local giftware retailer Tickety-Boo on a temporary letting and now they’ve converted to a five-year lease.”
The Meadows is something of an outlier in the Lend Lease portfolio, lacking the scale and glitz of the other centres. The company manages it on behalf of Legal & General and Aberdeen – the same consortium that owns Golden Square – until the time is right for a redevelopment and extension.
Lend Lease is also working up plans for the Tithebarn project in Preston, where it is in a 50:50 JV with Grosvenor. “And there’s 650,000 sq ft of retail at Elephant & Castle,” points out Boor.
When these projects will begin is in the lap of the Gods, or perhaps of the International Monetary Fund, but at Lend Lease
there is quiet talk of an upturn in the market. “Over the past six
or seven weeks all our discussions are showing an upturn in
activity,” says Thomas. “There seems to be an increase in the background noise.
“Of course the big test will be how it comes back in September. Will that background noise become meaningful interest?”
