Prestige shopping centres will power ahead, says developer

Hammerson, which yesterday said its sites were defying the downturn, said it was optimistic about its schemes for the Eastgate Quarters in Leeds and Sevenstone in Sheffield despite the recent wave of retail administrations.

Peter Cole, chief investment officer, said the firm is in talks with possible tenants for the two sites but the wider market was divided.

“We are continuing to see a polarisation of retail interests where large cities and strong retail destinations are trading well and weaker locations are (finding it) harder.”

Leeds and Sheffield are attractive cities for retailers, Mr Cole added, because Eastgate has John Lewis and Marks & Spencer as anchor tenants while Sevenstone will benefit from a lower level of retail competition in Sheffield. Both centres will have parking for 2,500 cars.

“We are making good progress on both sites,” Mr Cole said.

“What we are seeing is the retailers starting to plan for longer-term requirements. They recognise those which are successful destinations for retailers (but) it is a tougher economic environment.”

Eastgate will contain 130 new retail and restaurants units and include major changes such as a new civic square and the pedestrianisation of all the streets within the Quarters. It won planning consent for a scaled-down scheme last month.

Sevenstone will overhaul an area between Barker’s Pool, Pinstone Street and The Moor in Sheffield but has been scaled back. The scheme has outline planning consent and some of its buildings have detailed planning permission.

Hammerson said its current sites were defying the downturn after a rise in footfall and below-average vacancy rates.

The group, whose portfolio includes part-ownership of Brent Cross in London, the Bullring in Birmingham and Reading’s Oracle centre, said a series of UK retail administrations was having “little impact” on its business.

It reported a retail vacancy rate of below 3 per cent, compared to a market average of 12 per cent, and said footfall was up 2.6 per cent at its UK shopping centres, against a wider industry benchmark of 0.9 per cent.

David Atkins, chief executive, said: “Our regionally dominant shopping centres and convenient retail parks are trading ahead of national benchmarks and continue to attract successful retailers.”

The group reported half-year profits of £69.7m, down slightly on the £70.2m seen the previous year, after the impact of acquisitions and developments was offset by disposals and higher administration costs.

Shopping centres have been more resilient in the downturn as retailers ditch high street stores in order to focus their resources on higher footfall locations and retail parks offering greater space flexibility.

Other high-profile shopping centres include Cabot Circus in Bristol, Highcross in Leicester, Union Square in Aberdeen and WestQuay in Southampton.

Shopping centre rental income increased 8.8 per cent after efforts by Hammerson to rejig its portfolio.

At the Oracle, new leases have been signed for American lifestyle brand Hollister, Apple, TM Lewin and Paperchase, while lease surrenders with five occupiers at Brent Cross have resulted in new lettings with Whistles, Jaeger, Kurt Geiger, Lush and Hawes and Curtis.

Hammerson’s portfolio, which also encompasses UK office space and a number of shopping centres in France, is valued at £5.8bn. Around three-quarters of the estate is in the UK.

Earlier this summer women’s fashion retailer Jane Norman became the latest victim of a downturn in spending and fell into administration.

Retailers, particularly those selling non-essential items, have been struggling as consumers grapple with rising prices, subdued wages growth and Government cuts.

Home furnishings firm Habitat UK and the owner of Moben kitchens have also both gone into administration.

Edinburgh Woollen Mill bought the eight Jane Norman units on Hammerson’s estate, Mr Cole added.

ENERGY PLAN FOR NEW CENTRE

THE Eastgate Quarters project includes major changes such as a civic square and the pedestrianisation of all the streets within it.

The £600m scheme will also include the restoration of historic buildings, a two level shopping arcade, refurbished offices and the largest shopper car park in the city with about 2,500 spaces.

A low-carbon energy centre has been approved which will provide heating, cooling and electricity required by the development, with the opportunity to support neighbouring homes and businesses.