British Land may be snapping up Virgin Active clubs, but Francis Salway has been hitting the proverbial treadmill with all manner of projects at rival industry leaders Land Securities. It puts paid to any stereotype of property heads making just one decision a quarter – what tie to wear on results day.
With their various schemes in Fenchurch Street, Old Bailey and Victoria moving forward and income moving upward, everything’s in rather good health. At least as far as London is concerned.
While rent from the iconic advertising lights at Piccadilly Circus doubled, the northern outlook is perhaps more aligned with that of pop singer Morrissey – who famous penned the song ‘Piccadilly Palare’. For example, Trinity Leeds remains just 54.8 percent let and while Primark are taking a whopping 90,000 sq ft letting, this won’t be ready until 2010.
Glasgow’s Buchannan Street fairs slightly better being 68.7 percent let “by value” – perhaps a telling change of metric – but it’s a world away from London.
Let’s be fair though: it’s no surprise that regional centres are well outside the overriding trend of decreasing voids, (which fell to 3.9 percent in Q2 from 4.2 percent in Q1). London hogs most of the tourism and commuter dollar and when you count it out of the equation the country is in recession for sure.
It’s certainly what the majority of retailers are continuing see and this is born out by the trends in Land Secs’ interim statement. Despite having more shops occupied, footfall has not actually risen, with Q2 sales actually falling 0.4 percent against the same period last year. “Occupancy rates are up because retailers are still taking space,” Land Securities said to me, “footfall in our centres is high, 300m shopper visits a year. Retailers want to be in front of those sort of numbers.”
So how much will the divide between London and rest of UK grow over next year? That will depend wholly on consumer demand, it would seem, as retailers pick their spots cautiously. “We will look to marry our development expertise with retailer commitment to a scheme before we take these opportunities forward,” Salway said.
He added that the firm has “a £275m, 1m sq ft, pipeline of opportunities to meet the growing demand from food and fashion retailers”.
Considering that only two weeks ago, bailiffs were sent into Jane Norman by all its landlords, it’s positive that those smaller than Primark still have some hope. Sources at another property firm tell me that bailiffs found no stock when they went into Jane Norman – just bundles of cash (between £10-20,000) left under tills in some stores - implying a rather messy end.
There are those that seemingly have bundles of cash to spend though. At the other end of the spectrum, brands like skinny-fitting French chicsters The Kooples – soon to feature designs by Pete Doherty - are shooting up their profile on the high street, if you’ll excuse the pun. These boutique brands are few and far between though, and the mercurial rise of webstores like Asos – whose sales have soared by 69 percent year-on-year - must surely be worrying.
“Small scale retail works where it is backed by retailers who want to take space and we are seeing stronger retailers looking to take space,” Land Securities added, saying that landlords need to react more to “accommodate growth or shrinking, reconfiguring space”. While it’s a laudable aim to chop up larger outlets so smaller businesses can get a foot into prime locations, this is also being flipped on its head as supermarkets head for the high streets.
“Supermarkets are increasingly going in town for space but are not ever going to replace traditional anchors,” Land Securities said, although for ailing, secondary centres that have no hope of attracting Topshop or John Lewis, this may not be the case.
While today’s figures can’t in any way be used as a barometer for the retail market, they are good news for the listed property sector and once again show Land Secs’ shareholders that the tall man with the plan is keeping everything in shape. Maybe they’ll keep the ‘health’ theme alive by picking up a few discounted care homes?