Meadowhall shrugs off high street gloom as sales grow gloom

MEADOWHALL’S joint owner said the shopping centre continues to outperform the market, growing sales despite the turbulent retail climate.

Sales at the centre, one of the UK’s biggest out-of-town retail destinations, have increased 1.4 per cent year-on-year since January, said landlord London & Stamford Property.

Footfall at Meadowhall, one of only six “super-regional” out-of-town shopping centres in the UK, has grown 2.7 per cent during this time. L&S said this represented “significant outperformance against the national average”.

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Meadowhall’s growth comes despite a bleak environment for retailers, which are battling to attract consumers experiencing falling disposable income and surging inflation. They also emphasise a growing flight to prime retail locations from secondary sites.

L&S said Meadowhall, run by centre director Darren Pearce, is 97 per cent occupied. It has completed 16 new leases and exchanged contracts on a further four since the start of April. Boux Avenue and Fashion Rocks have now opened and L&S said new lettings include Van Mildert, Beaverbrooks, Krispy Kreme and Vans.

Chief executive Patrick Vaughan said: “London & Stamford remains committed to identifying and making investments with the potential to deliver strong, sustainable income, whilst adding shareholder value through the implementation of asset management initiatives and achieving good returns on asset disposals where we consider it appropriate.”

He added the group continued to look for growth opportunities, and had a war chest of more than £800m to invest in these.

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“We continue to assess opportunities within the retail, distribution, central London residential and City of London office markets in particular and are hopeful of making further material investment during this financial year,” said Mr Vaughan.

Meadowhall’s growth came as national figures showed price-cutting by retailers helped sales rebound partially last month. Data from the Office for National Statistics showed volumes of retail sales rose by 0.7 per cent in June month-on-month. That only partially made up for a 1.4 per cent fall between April and May.

L&S bought 50 per cent of Meadowhall for £588m in 2009 from British Land, although it now owns only 15.7 per cent of the Sheffield site after a later tie-up with Middle Eastern investors.

The original deal included an option on land next to the site, currently owned by British Land. After failing to agree a price for the land, the two landlords went to arbitration to determine its value.

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L&S yesterday said the value of its option on the land had now been determined, and it was working with British Land to complete the process. The group declined to specify this price, or give further detail on the project.

It is thought to involve bringing in Scandinavian furnishings giant Ikea as anchor tenant for a 700,000 sq ft extension, which would increase Meadowhall’s size to more than 2m sq ft.

The land, which has outline planning consent, is set aside for general employment and business use, which also allows for limited housing.

In May the group’s chairman Raymond Mould said: “We are very happy with our investment in Meadowhall which exemplifies the retailing trend away from the high street and secondary locations towards super regional and internet shopping.

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“We will continue to seek retail investment opportunities where we see value and we shall fully support our co-owner, The British Land Company, in developing surplus land around Meadowhall.”

The landlords are also ploughing £7m into a revamp of the centre’s dining area, transforming the Oasis Food Court into the Oasis Dining Quarter.

L&S said the overhaul, due to complete in October, is ahead of budget. The revamp will increase the upper level space by about 27 per cent, with a new mezzanine.

The area will have a new entrance, new logo and be reconfigured to improve the flow of customers.

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New restaurants will include Harvester, Chao Baby, Las Iguanas, Rice and Giraffe. The revamp forms part of plans to boost evening trade at the centre.

Shares in the group yesterday closed down 1p at 130.4p.

Analysts at Shore Capital said: “This is a strong update from London and Stamford, which has been active in the recent period.

“Asset management initiatives also remain tangible, with 16 new leases having been signed at Meadowhall... This remains an excellent company, with a strong balance sheet, excellent track record, impressive management team and outstanding prospects.”