Published: 31 August, 2006
The West of England is a hotbed of retail development activity at the moment. There are no fewer than three major city centre schemes underway, and a number of smaller centres are also seeing development. What's driving all this activity and what are the leasing prospects for all these schemes?
The most advanced project in the region is P&O Developments' Drake Circus in Plymouth, which is less than two months away from completion. Despite the tough retail climate P&O director Graham Corser is pleased with the way the 560,000 sq ft scheme has let. "We expect to be between 80 and 90 per cent trading on opening day," he says, "depending on how the fit-outs go."
The latest signings include Billabong, Game, Lush, Perfume Shop, Passion for Perfume, Starbucks and Burger King, and even at this late stage joint agents Lunson Mitchenall and Hartnell Taylor Cook are still signing up new tenants. "We've got a couple of 8,000 sq ft units left, two or three middling units and a few smaller ones," says Corser. "We'd always planned to keep one or two back in each size band - that's how we'll create our rental evidence."
In its final form Drake Circus has three anchors: Marks & Spencer at one end and Next and Primark, sitting one on top of the other, at the opposite end. They occupy the 120,000 sq ft space originally allocated to Allders, but Corser now feels he has a better end product. "Primark will be an incredibly strong anchor," he says. "They'll be a real pedestrian puller through the scheme - more so than Allders would ever have been."
He points out that Primark has just opened in the former Littlewoods store in Exeter, and is trading phenomenally well. "We expect them to do the same here," he says.
But P&O's strategy has been to cater for all ends of the fashion spectrum, and Corser is also pleased with the high-end offer. "Oasis and Coast wouldn't once have considered doing Plymouth," he says. "It shows that the demographic is changing." The core catchment of 270,000 has always been loyal to Plymouth, but the challenge for Drake Circus is to draw in shoppers from the more affluent outlying districts who once would have bypassed the city centre and headed for Exeter or even Cribbs Causeway.
Completion of the centre won't end P&O's involvement in Plymouth, even though it's pre-sold the £200m investment to the Morgan Stanley Real Estate Fund. Once Boots relocates into Drake Circus P&O will take over its former store and break it up into eight or nine units, effectively forming a second phase for Drake Circus.
Next out of the starting blocks is Princesshay in Exeter, a 479,639 sq ft project by Land Securities. The steelwork is well advanced and the centre is on target to open in autumn 2007, but it's already more than 65 per cent pre-let or in solicitors' hands.
Designed by Chapman Taylor, the development will provide more than 60 new retail units anchored by Debenhams. Quicksilver, H&M, Morgan and La Senza are among the latest to sign up. In addition, Zara has just taken a 21,527 sq ft unit that will trade from three levels, USC has taken a 6,243 sq ft corner unit and Clinton Cards has signed for 6,458 sq ft.
John Grimes, retail leasing director at Land Securities, says: "As the tenant mix becomes more apparent and retailers understand the environment we are creating in Exeter, they're all keen to be part of the Princesshay scheme. We've been able to achieve zone A rents in excess of £250 psf and are confident that we'll be opening a fully let scheme in 2007, just as we achieved at Maidstone and Canterbury in 2005."
Land Securities is also heavily committed to Bristol, where it has a 50:50 stake alongside Hammerson in the 1.1 million sq ft Broadmead project. The developer describes Broadmead as "A £500m city centre renaissance that aims to lift the city from the bottom half of the UK 's retail premier league into the top five."
House of Fraser is taking the four-level anchor store, and the scheme will feature another 16 major stores and a further 104 smaller retail units, 240 city centre apartments as well as a continental-style square and a 2,616- space car park.
Peter Courtney, director at letting agent Lunson Mitchenall, explains that with two years to go until the September 2009 opening date, the strategy has been to get the MSU occupiers in place. "In addition to Zara, H&M and Virgin, we have a dozen deals that had either just signed or are about to sign," he says.
Courtney says Broadmead is leasing quickly because of pent-up demand. "So many retailers aren't in Bristol or don't have the right quantity or quality of space," he says. In addition to the main mall, Broadmead will have its own fashion district at Quakers Friars, anchored by Harvey Nichols. "We have Reiss and six others in place, and we've received an offer from a celebrity chef to take over the Quakers Friars building," Courtney says.