Has the tide finally turned for retail? Anyone who has braved the festive crowds recently would be forgiven for thinking so.
Whether prompted by fear of another lockdown, anxiety over Christmas shortages or simply a release of pent-up shopping frustration after Christmas 2020 was cancelled, high streets and shopping centres up and down the land have been crazy busy of late. And the good news is that the good times could well roll into the new year.
The property industry is showing signs of renewed interest in retail, with prime shopping centres seemingly top of their shopping list. I asked a few weeks ago what Mark Allan would snap up next – we now have the answer. Landsec is understood to be in talks to buy out Lendlease’s 25% stake in Bluewater, Kent, for £200m, increasing its stake to 55%.
This is just half what Lendlease was reportedly seeking and doesn’t compare favourably with the £656m Landsec paid Lendlease for a 30% stake in 2014, or the £150m Hermes Investment Management sold its 7.5% stake to Royal London Mutual Insurance Society for in 2017, but is still a big deal for the sector. After all, this is Landsec we’re talking about. If it is prepared to back retail – and itself – to this extent, it surely bodes well for the sector in 2022.
There are other causes for renewed optimism. In its European Annual Outlook, AEW predicts that prime shopping centres will become 2022’s most attractive asset class, citing the significant repricing seen in the past few years (the Landsec deal would value Bluewater at around £800m compared with £2.2bn in 2014) and forecast returns of 7.4% – higher than expected in any other sector.
It is all well and good for prime shopping centres, though. There was always going to be a flight to quality post pandemic, especially if you can bag something for a fraction of what it cost a few years ago. What about secondary shopping centres? Will they suffer a similar fate as the dearly departed department store?
Earlier this year, we asked a group of architects to reinvent the department store. Just as Allan plans to turn Bluewater into a more mixed-use scheme, they reimagined the department store as a mixed-use scheme, with retail playing far less of a role – as it does in the planning application submitted for the soon-to-close House of Fraser on Oxford Street.
The message was clear: department stores might be dead, but the buildings aren’t. The same could prove true of secondary shopping centres. In the second part of the challenge, we asked nine experts to reinvent a mid-1970s secondary shopping centre. Their visions are, if anything, even more radical than those for the department store. Some veer dangerously close to dystopian Brave New World or 1984 territory, but others sound plausible and viable. Why not rewild a redundant shopping centre?
Tellingly, some look not just to nature but to the past for their visions of the future and the retail element is vastly reduced, or perhaps a better word is rightsized. Time will tell who is right. But one thing is for sure: both in primary and secondary shopping locations, the retail revolution is about to gather momentum.