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The state of retail property in the UK

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At the British Council of Shopping Centres (BCSC) conference last week, various challenges currently facing retail property were being keenly discussed by top executives from the industry.

Whilst there, Retail Gazette quizzed Miles Dunnett (MD), Asset Manager at Liverpool One owner Grosvenor, Mark Boor (MB), Head of Retail Asset Management at Lend Lease, Caroline Kirby (CK), Property Director at Capital Shopping Centres (CSC), and Claire Barber (CB), Senior Asset Manager at British Land about their thoughts on some hot topics.

What are the major issues you have been discussing at this year’s BCSC conference?

MD: “In regards to Liverpool, occupancy, footfall and sales are all high. Retailers are going to have a difficult Christmas however, so a major focus is whether we can plan ahead for this instead of just dealing with the consequence in Q1 next year.

“Most retailers should make it through Christmas but rental quarter day in Q1 and Q2 2012 will be a difficult time for many.”

MB: “At Bluewater we are in the process of building a new events area. For a long time now we have been talking about the importance of leisure but what this used to mean was bringing in restaurants and a cinema. What we recognise is that you have to move on and make leisure an anchor to a centre rather than an added extra.”

CK: “With our type of portfolio, with so many prime locations, retailers are mainly discussing upsizing or downsizing existing units. Because we do not have secondary centres there are not businesses with problems coming to us asking to get out. It is still very much about getting things done.”

CB: “We have a lot of refurbishments, extensions and new tenants coming in to our sites. Additionally a new 242,000 sq ft scheme anchored by Tesco and another major retailer in Whiteley near Fareham, basically an open shopping centre, is opening in spring 2013.

“It will be very interesting to see which way the economy goes in the next 12 months but we are in a very strong place at the moment.”

Do you think there needs to be significant changes made to planning procedures?

CK: “We are partners with local councils at many of our schemes and they have been great both as superior landlords and as authorities looking to build up their centres.

“Look at the great work that has been done in Manchester, it is possible. I do understand people’s frustrations but our experience is that though it may take time to go through the whole process of getting a new centre off the ground, if you have the right councils working with you it can be done.”

MD: “As a landlord you can not work in isolation from local councils, no matter how big you are.

“However, planning needs to get quicker and more efficient and nobody wants to see political agendas affecting development decisions.

CB: “I really like the concept of the big society but it is hard to tell what will come out of the localism agenda. We already do a lot of work within communities and because we have such prime locations, any changes are unlikely to affect us too greatly.

Mark Boor, Head of Retail Asset Management at Lend Lease
Mark Boor, Head of Retail Asset Management at Lend Lease

How have you adapted your sites to the evolving demands of modern retail?

MD: “We have worked hard to improve the feel and experience of Liverpool One, trying things which may otherwise seem daft, like pianos around the site which any consumer can play, flashmobs, deck chairs and children’s play areas. It’s important to get your leisure offer right because it drives that all important dwell time.

“Also multichannel is increasingly vital. Two years ago people thought online was going to the kill retail property but now some of the dominant players have realised that it represents a key offer for their stores.”

CB: “It is easier for someone like Westfield who is starting from scratch to create theatre but with Meadowhall we do not have the huge exhibition spaces on site. So what we have done is look at the catering, which is a massive driver of dwell time, spending £7 million to improve this offer.”

MB: “Demand for bigger stores has been an issue for a while, but definitely at the moment bigger is seen as better. A sense of theatre is also really important. If you look at some of the really successful retailers at the moment it is not about what they sell, it is about how they sell it and how you as a consumer feel buying it.

“As an owner you have to think as a retailer, and think laterally about what changes we can make that can help retailers. The internet is a whole world of possibilities.”

CK: “Demand for larger units is offset by smaller units being used in different ways to ten years ago. Food was a major focus in our annual results, it is increasingly important but often these units are smaller.

“Look at Westfield Stratford, it has 70 food units.”

With a lack of new centres in the pipeline, what’s the outlook for large retail developments?

MB: “One thing that is clear is that a whole chain of events, linking together, needs to occur to get things going. There is becoming a pent-up demand from retailers for bigger space, but owners can not build the right properties in the appropriate environment because the banks are not lending.”

Miles Dunnett (MD), Asset Manager at Liverpool One owner Grosvenor
Miles Dunnett (MD), Asset Manager at Liverpool One owner Grosvenor

CK: “There are landlords out there getting work done. Land Sec is clearly doing things in Leeds, we have got our planning application in for Nottingham. We talk about a lack of big developments but at CSC we have over 50 asset management initiatives which are either being investigated or instigated and that’s no mean number.”

MD: “Extensions and working harder with what you already have is the immediate future, and the retailers who are looking to upsize are starting to stack up now.

“There are some larger developments underway like what Land Securities is doing in Leeds, but the majority of money spent will be on re-workings – less development risk, less occupier risk.”

How can secondary centres be invigorated?

MB: “The polarisation between super prime real estate and the rest will continue for a few more years but there will be a shakedown and secondary centres will find a new niche, high streets will reinvigorate themselves and will change.”

CB: “I think there are too many shops in the country, you do not need the same representation in smaller areas, people are willing to drive further to shop and use the internet.

“I am sure there are all sorts of things that could be done to help but you are just delaying the inevitable.”

Published on Tuesday 27 September by Editorial Assistant

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