BCSC: Secondary shopping centres 'at risk'
Published: 02 February, 2010
Almost half the shopping centre investment deals completed in the past five years risk unravelling because the purchasers cannot service their loans, according to new research from DTZ and the BCSC. In all £10.1bn of deals could go bad.
The research reveals the growing polarisation between the performance of prime and secondary retail property, which has been exacerbated by the economic downturn. It found that 43 per cent of all centres purchased since 2005 are in danger of defaulting, and it identified four main reasons why secondary properties are especially vulnerable, citing a lack of investment, poor asset management, the failure of a number of national retailers and poor due diligence at the time of purchase.
The BCSC has set up a task force to deal with the problem and incoming president Neil Varnham said: “Shopping places are often the lifeblood of local economies and communities – particularly in our smaller towns and cities. The failure of these centres can be detrimental to all parties involved – consumers, local authorities, owners, retailers and banks – and requires a collaborative, long-term view from all parties involved.
“Banks will only fund investments that make economic sense and this will ultimately drive their lending strategy. The role for a good asset manager is crucial to ensure that their investment is being managed effectively, bringing an understanding of retailers and consumers to attract new tenants, drive footfall and sales. There is a role for the retail property industry to play by addressing the perceived skills gap in asset management expertise,” Varnham concluded.
