Schemes move forward Key decisions are set to be made on three key retail projects in West Yorkshire – the Trinity centre and the Eastgate Quarter in Leeds, and Trinity Walk in Wakefield. By Nadia Elghamry
When Paperchase signed for a store on Commercial Street for a reported zone A of £185 per sq ft at the start of this year, the age of denial in Leeds was over.
The deal, for the former Disney store, was a marker in the sand for the Leeds market – and some way from the £285 per sq ft zone A achieved at its peak. On a net basis, agents say rents have effectively halved. “We’ve been very hard hit, not by demand but by availability,” says Jonathan Newns, retail partner at King Sturge in Leeds.
Paperchase follows a raft of such deals. For example, American Apparel signed for the former USC store on Briggate, where a new 10-year lease was penned, but with two years at a base rent with a top-up from turnover. “The client was keen just to get a deal done,” says Newns.
It is now hoped that the bottom has been reached. Newns points to a number of deals just off the prime pitch on Lambs Lane to retailers such as Cath Kidston, and Envy on Briggate. That, along with interest in empty stores, could bring a “little bit of growth and, if it’s prime, maybe £200 per sq ft net”, he hopes.
“No optimism”
Others are less optimistic. John Hubbard, retail director at BNP Paribas RE, believes that things have got worse. “I hate being negative but you’ve got to tell people the truth there’s no optimism I can see the corner of Bond Street from my office and you can see the empty units,” he says. “It’s never been like this before.” he adds.
Hubbard remarks that any retailer coming to Leeds would have their pick of shops.
Tom Cullen, director of retail at Colliers CRE in Leeds, admits there are opportunities on the prime pitch on Commercial Street but believes this to be a hangover of Trinity Leeds, Land Securities’ 1m sq ft retail development in the city centre.
“People are not committing themselves but, now that Next and River Island are secured in Trinity Leeds, it is more likely that, over the next few months, we’ll see the full extent of relocations,” he says.
There is definitely growing anticipation that LandSec will crack on. For too long, the city has been poised on a knife-edge expecting a timetable to be released, but details have been slow to trickle through.
Agents say that tenants in LandSec’s Leeds Shopping Plaza have been given a deadline of August to move out. Others suggest that LandSec is close to its prelet threshold – believed to be between 40% and 60% – helped by lettings to Superdry and River Island, which are believed to be among a slew of lettings just about to be announced.
Bob de Barr, development director at LandSec, says the developer needs to achieve a certain prelet threshold, but adds that this is not 60%. “We also wanted to take advantage of the weak construction costs and get a better contract price. We’re moving towards completion in autumn 2012, which means a start on site this summer,” he says.
Leeds, says de Barr, is unlike other major retail schemes that LandSec has been involved with. “It’s not like Bristol or Birmingham or Cardiff, where we created a new pitch and a big leap up the hierarchy. In Leeds, we are already in pitch, and the city is quite high up the retail rankings at 5th”.
This will obviously have implications for the zone A rents it can charge. One local agents says: “I daren’t think what they paid Next in terms of reverse premiums”.
More space could be on the cards. The developer last month submitted a planning application for the construction of a retail extension and new shopfronts to Boar Lane for a net gain of more than 5,000 sq ft.
There is also the option the 1960s West Ridings House, which went into receivership in April. The shopping centre incorporates 150,000 sq ft of retail and a 15-storey office tower and fronts onto Bond Street and Albion Street. It is anchored by Next, which is due to relocate into LandSec’s scheme. De Barr says: “It is next to our ownership. We are very interested and will cast our eye over it.”
Agents seek clarity on Eastgate Quarter
There is one new name nearly every person in Leeds seems to be waiting for: John Lewis. The retail darling has been signed up to Hammerson’s and Town Centre Securities’ Eastgate Quarter – a 1.5m sq ft scheme to the east of the main retail core – since 2005, and was due to open a 260,000 sq ft store this autumn.
Shoppers are still waiting.
Andrew Hilston, Hammerson’s project director on Eastgate, says that at the moment the team is “very, very active and busy working on the detailed design work”.
He adds: “The project has never been on hold. I want to disabuse everyone of this notion that things haven’t been happening.”
The s106 agreement has been signed and Hammerson is now working on the reserved matters. “The next announcement from us will be the planning milestone, and we’ll be saying something in the run-up to the autumn,” says Hilston.
But, when pressed on start dates, Hilston says: “The important thing was for us to achieve the planning milestones and then talk publicly, and I think the economy needs to continue to stabilise.”
On hold, delayed or simply quietly working through the details – agents want clarity. “I genuinely feel that the plans for Eastgate were put together in a different time,” says Tom Cullen, retail director at Colliers CRE.
“These grand masterplans were done back in the day and it was a fantastic idea. But you can’t make a scheme pay on anchor lettings alone. Someone has to come in and pay a higher zone A to compensate, and I doubt there are retailers out there to do that at the moment.”
Others agree. Jonathan Newns, retail partner at King Sturge, believes the scheme could be as far as five to seven years off. He is also concerned about integration into the centre. “I believe Hammerson will be a weekend shopping environment. You’d walk in the week to Trinity or Briggate and at the weekend you’d drive to Eastgate.”
Fellow developers share this concern. Bob de Barr, development director at LandSec, adds: “We would like Eastgate to be a scheme that is inclusive and integrates into Leeds, rather than a destination. It is very important that people shop in Leeds.
“We are not here to help Hammerson, but any independent observer will tell you they need to replan the scheme.”
Hilston robustly denies any suggestion of a scaling back or rejigging of the scheme “We don’t feel the scheme is too large for today’s market,” he says, but adds: “It will come as no surprise that we are looking at a couple of changes.” At present, this chiefly surrounds the scheme’s residential element. “We haven’t made any firm decision and we are looking at having no residential as well.”
Trinity Walk is hard-won
Since buying the Trinity Walk site last December from administrator KPMG, the partners behind a rescue of Modus’ retail scheme in Wakefield have been hard at work.
Around 100 men work on the site daily and, in the space of four months, the consortium of AREA Property Partners, Sovereign Land and Shepherd Construction have cemented all the deals left hanging when Modus collapsed.
“We’ve done a phenomenal amount of work. We didn’t simply inherit these deals,” says Chris Geaves, director at Sovereign Land. “We’ve done around 10 deals, and I don’t think people realise that.”
Financial terms are being kept under wraps, and all Geaves will hint is that “we are not giving away as much as people think. In a month or so we’ll show people how we have moved zone As”. The centre is, at present, 60-70% let – although Geaves refuses to say whether this is by floorspace or income.
Completion is set for mid-April 2011. Geaves says shops will soon be handed over to Sainsbury’s and Debenhams.
