Leisure is in the property spotlight and, having spent most of my career specialising in it, it is great to see both the strength in the operating market and the institutional demand for this once ‘alternative’ investment class.
The statistics speak volumes. The restaurant sector alone saw a staggering year-on-year increase in sales of 17% last year, and with consumer confidence on the up, this continuing growth in leisure spend is forecast to continue. Plus, despite a disappointing year in 2014 for cinema attendance, this year is set to be a record year thanks to blockbusters such as Jurassic World and Star Wars: Episode VII - The Force Awakens.
This confidence and increasing spend has translated positively into leisure property performance. In our own leisure portfolio, net income, rental values, turnover and footfall are all up and I am sure most other leisure property owners will have also done well.
Given it is a more mixed picture across retail, it is not surprising that landlords and developers are rushing to bolt on leisure to existing schemes, set aside significant amounts of leisure space in new shopping centres and even develop smaller standalone or mixed-use leisure schemes.
But there is a danger that in the scramble to respond to demand, leisure gets reduced to an industry buzzword - the answer to all our prayers in this rapidly changing retail world.
How many restaurant covers, cinema screens or other leisure and entertainment activity space will satisfy consumer demand? As long as there are only 24 hours in a day, leisure cannot go on giving indefinitely. The amount of money we have to spend might rise, but the amount of time we have won’t.
Offset these constraints against the ever-increasing amount of leisure space available and it’s clear there’s only room for the very best locations to thrive. And to me, the answer to being the best is three-fold.
First, we must anticipate the impact of changing consumer habits. We’ve reshaped our portfolio around these and now have a retail and leisure portfolio suited to people shopping less frequently but for longer, travelling further to do so and treating themselves to food and entertainment while they’re there. After all, a secondary shopping centre will not be saved by an added leisure experience if there is a larger, dominant centre with a broader offer delivering wider choice and a better experience within the catchment.
Second, success must be built on insights - understanding which concepts and operators will work well and where. For example, at Westgate Shopping Centre in Oxford, leisure forms a significant part of our ambitious redevelopment plans and will include a boutique cinema, rooftop terrace dining and 25 restaurants and cafés. Leasing conversations are well under way and for a considerable number of the operators, Westgate in Oxford will be their first location outside London, as we have grown relationships with them through our London portfolio.
But what is right for Oxford’s catchment may not be right in another of our leisure or retail destinations, reminding us that one size does not fit all and both older and newer relationships are essential to the success of all our destinations.
Finally, innovation is essential. Recently, Cineworld at Xscape in Milton Keynes opened its first 4DX cinema in the UK, which is proving to be a real point of difference in the increased cinema offering in that catchment. Time will tell how Mexico’s educational play experience Kidzania fares in the UK, but the fact it has prompted so much buzz about what the next big thing in leisure is can only be a good thing.
As leisure continues to grow, inevitably there will be winners and losers, but by focusing on dominance, insight and innovation, we’ll be ensuring our destinations succeed and thrive.
Polly Troughton is head of retail parks and leisure at Land Securities