Green Shoots
Published: 11 November, 2010
The UK shopping centre development pipeline has slowed to a trickle, but there are signs of renewed confidence among developers.
In contrast with the heady days three years ago, when million-sq ft shopping centre openings were almost run-of-the-mill occurrences, only a handful of new schemes are currently on site. The recession has laid waste to many a developer’s ambitions. But a few brave development teams are persevering with schemes, and more could be about to join them.
Just as Land Securities completes One New Change in the City of London, it has pushed the start button again on its Trinity Leeds project.
The most visible sign that the Trinity project in Leeds is back up and running is the arrival of a new tower crane on the city’s skyline, roughly 18 months after Land Securities called a halt to construction on its million-sq ft retail project.
“We’ve been quietly getting on with it until we had the critical mass to go back to the market,” says leasing director John Grimes. “Now we’ve got real momentum and a real purpose and we’re able to send a strong message to the market.” And he points out that 47 per cent of the new space is already pre-let.
A 36-month build period means the new scheme is on target to open in Spring 2013.
So what prompted Land Securities to restart the project? “Deals have become more acceptable,” says Grimes. In terms of rents he says terms are on a par with existing prime levels for Leeds, with £300 per sq ft zone A on Briggate and £275 on the main internal mall.
And in terms of tenant mix the tone is firmly mid-market. “We’ve gone more for high street brands,” Grimes explains. “We’re not looking to compete with the Victoria Quarter.”
To underpin the centre’s mid-market credentials Topshop has taken 40,000 sq ft and River Island 19,000 sq ft, both trading over two levels and facing onto the prime Briggate pitch. And within the centre Next is taking 54,000 sq ft over two levels and Cult 20,000 sq ft while H&M will trade from 20,000 sq ft over three levels.
Other pre-lettings include Hollister, Apple, O2, Ernest Jones and Dorothy Perkins/Burton while Marks & Spencer is extending into the new centre to create a 160,000-sq ft flagship in its home city.
A natural fall across the site means that the pedestrian flows will be spread evenly across what are effectively two ground floor levels, one trading off Briggate and the other off Commercial Street, while the top floor will be anchored by a four-screen Everyman cinema and six restaurant units. Yo! Sushi; Carluccio’s and Handmade Burger have already signed pre-lettings while another is under offer.
The tight city centre site means it has not been possible to create more parking on-site, but Grimes does not see this as a drawback, pointing out that there are 2,000 spaces in existing car parks surrounding the scheme.
While the new build project, occupying an entire street block in the heart of the city centre, is the most visible element of Trinity Leeds, it also incorporates the adjoining Leeds Shopping Plaza. The existing scheme is typical of the institutional 1960s construction that dominates a lot of the city centre, and Land Securities’ aim is to bring it up to the standard of the new-build with upgraded finishes and a new atrium to bring in natural light.
But while Land Securities is looking to build on the strength of one of the UK’s top metropolitan retail centres, two other developers are looking to prove that shopping centre development is still viable away from the large cities. In Newbury, Standard Life is mid-way through construction of its Parkway project while in Wakefield Sovereign Land has revived Modus’s Trinity Walk.
Like its near-namesake in nearby Leeds, Trinity Walk in Wakefield spent a period in mothballs following the collapse of its original developer Modus Ventures. The site had been abandoned after completion of all of the site works and erection of about a third of the steel frame.
In December last year it was bought by Sovereign Land, AREA Property Partners and Shepherd Construction. As soon as the purchase completed the new owners were back on site, with only minor tweaks to the design. “We revisited the finishes and went for an EFTE roof,” explains Sovereign Land director Chris Geaves. “We’ve made it more efficient so it looks better and works better.”
Work has progressed quickly and the scheme is now targeting a May 2011 opening date. But at the beginning of this year the decision to restart work looked brave. “Instinctively we knew demand was there,” remembers Geaves. And letting progress at the 500,000-sq ft scheme looks to have vindicated that decision.
Anchor tenants Sainsbury’s with 117,000 sq ft and Debenhams with 96,000 sq ft have been joined by Arcadia which has taken 20,000 sq ft for its Topshop, Topman, Dorothy Perkins and Burtons façias.
JD is taking a 6,716 sq ft unit and Bank the adjacent 5,661 sq ft unit – both are high profile two-storey flagship stores at the Teall Street entrance to the centre, which forms the principal link to Wakefield city centre. Republic is taking a 5,877 sq ft single storey unit opposite Next and adjacent to Arcadia. Men’s accessories and gift retailer Menkind has taken 2,562 sq ft while Coral has signed up for 1,227 sq ft.
All units have been let on 10-year leases and Max la Frenais, Sovereign Land’s leasing director, echoes Land Securities’ John Grimes’ view that there is an appreciable improvement in the market. “The tide has turned a bit,” he says. “We’re finding that we’re not having to pay as much in contributions as we’d expected.”
La Frenais says quoting terms are based on £125 zone A although as a rule units are being leased on overall rents. This is less than had been achieved previously in Wakefield, but La Frenais explains: “We started from scratch with rents when we took over the scheme. We have to recognise we’re in a very different market.”
The other major town centre scheme under way is Parkway, Standard Life’s 475,000 sq ft mixed-use scheme in Newbury.
Ed Jenkins, fund manager of Standard Life Investments’ UK Shopping Centre Trust, explains the complex construction project was delayed by the need to excavate multiple levels of underground car parking. But now the shell of the 70,000-sq ft Debenhams anchor store has been completed. “It’s beginning to look like a shopping centre,” says Jenkins.
In addition to Debenhams, New Look and H&M have both taken 20,000 sq ft MSUs. With another 25,000 sq ft of lettings in solicitors’ hands, the scheme is now 45 per cent let or in legals. “And there are more in advanced negotiations,” adds Jenkins.
Although he would not be drawn on rental levels, Jenkins says: “We are offering turnover rents on this scheme, as we are in the rest of our portfolio. We know Parkway will push Newbury up the national rankings and everything we’re doing is in line with our expectations.”
