Guildford has got a problem. According to EGi data, the Surrey town has the most expensive vacant space of any major retail location in Surrey, Sussex and Kent. The figures show that a higher proportion of high-cost town centre space is vacant in Guildford than in rival locations. Only Chichester, Tunbridge Wells and Brighton come close.
At the same time, the research appears to show that Surrey landlords are hopeful of nudging up rents. Guildford asking rents are 60% above the 10-year average, compared with 20-30% in most locations. In some – Croydon is the outstanding example – asking rents are now substantially below the 10-year average.
As Guildford and a clutch of other Surrey towns prepare for redevelopment, council officials and senior agents say the figures do not undermine plans for new building.
Graham Tring, retail director at Guildford agent Wadham & Isherwood, says that the disposal of a handful of larger, more expensive units – including the 12,000 sq ft former Habitat store, on the market having failed to let first time around at £485,000 pa – has skewed the figures.
“On the whole, landlords are commercially aware,” he says. “Guildford is lucky with demographics and the market has held up well. The top rent, £325 per sq ft zone A to Calvin Klein over the 2011-2012 winter, was serious growth given that zone A topped at £230 per sq ft just four years ago.”
Tring hints that landlords are simply catching up with the latest market tone.
Alistair Parker is development partner at Cushman & Wakefield and an adviser to Guildford council. He says: “Guildford is the premier regional centre and until recently the only place where rents were still climbing, which reflects high demand and restricted supply of new space.”
He points out that the last major retail scheme of more than 200,000 sq ft was built in 1967. “I don’t think landlords are pricing up: instead, I think it is about responding to retailer offers,” he says.
EGi data shows that although vacancy rates in Guildford are high, only 15,000 sq ft is modern space. Much of the vacant space is concentrated in larger units, some of which – like the former River Island unit – is now being divided.
Chris Mansfield, Guildford borough council’s head of economic development, says: “Quoting rents are high, but the high street trades well. I wouldn’t say rents were pushing what is realistic in the prime pitches.”
As the next phase of Surrey retail development begins, those assumptions are sure to be tested.
CAMBERLEY
EGi figures show Camberley in the middle of the table of towns with high retail vacancy rates. Retail asking rents are now more than 20% below the 10-year average.
Could new development put that right? It is still early days for the Mall Fund and Centros, working together on plans for a 250,000 sq ft extension to Camberley’s 377,000 sq ft Mall.
The 5-acre site in the town centre has been a hot development prospect for years, and a top council priority since 2010. Hopes are high that a planning application could be with Surrey Heath council planners by the end of 2013.
A Centros spokesman says: “We are working on different schemes and ideas. Hopefully something will come of it later this year.”
Some observers have their doubts. One says: “They are trying to crowd an awful lot onto one site – it could end up looking like a wedding cake, built in layers. It will be a challenge for Centros to fit it all in.”
CROYDON
Croydon has experienced the sharpest fall in asking rents, compared with the 10-year average of the 10 main retail centres in Surrey, Sussex and Kent.
EGi data shows today’s asking rents down by 38% on the 10-year average. Revival depends on development, which now seems likely to go ahead following the end of a very public battle of retail giants Westfield and Hammerson over the 633,000 sq ft Whitgift Centre, in which they both had interest. The dispute was resolved last month in a move that looks like a points win for Westfield.
Westfield’s 1.3m sq ft plan and Hammerson’s rival 2.1m sq ft plan are to be subsumed into a new strategy in which Westfield buys a 50% stake in Croydon’s £115m Centrale shopping centre from Hammerson. The joint venture will also buy a 25% stake in the Whitgift Centre, following completion of Hammerson’s conditional acquisition agreement with vendor Royal London.
Together the duo will redevelop and combine the two main Croydon shopping centres – the Whitgift Centre and Centrale – into a 2m sq ft scheme. Work on site could begin in 2015.
The deal came quicker than anyone dared hope, but was not unexpected. Before the announcement one senior developer with a long-standing interest in Croydon retail told EG: “Both Hammerson and Westfield have blocking shares in the Whitgift Centre and, in any case, Croydon is a phenomenally difficult place to do business. In the end somebody will pay somebody else to walk – but who does the paying and who does the walking remains to be seen. Neither developer can afford to be seen to lose.”
The smiling outcome of the joint venture seems designed to make sure both can claim to be winners.
GUILDFORD
The queen of Surrey retail destinations, Guildford is preparing for its first round of major retail development for three decades. Land Securities, Lend Lease and Queensberry have been shortlisted as developers of what could be a 450,000 sq ft scheme on a 6.2-acre site at North Street. Guildford council’s cabinet will make a decision on 28 March.
The impetus is provided by research suggesting Guildford will have 600,000 sq ft of unmet demand for new retail space in the next 20 years. A large new John Lewis department store is thought to be the prize awaiting the council’s choice of preferred developer. Meantime, thoughts are turning to the way the new development will link into the existing Hermes-owned Friary Centre and the prospects for an extension or revamp.
“To let the Friary determine the shape of the new development would be to let the tail wag the dog,” says Alistair Parker at Cushman & Wakefield, which is advising the borough council. “The aim of the new scheme has to be, first, to reinvent North Street.”
Hermes is understood to be talking to PRUPIM about a £160m sale.
Woking asking rents are down by 10% on the 10-year average, according to EGi figures. At the same time, its vacancy rate puts it in the middle of the local league table of key centres.
The town’s downbeat retail reputation belies a wealthy consumer catchment and Woking council is now turning developer in an effort to improve the retail offer and introduce an evening economy.
In order to help open the way for a 120,000 sq ft retail development, it recently paid £8m to the Lancashire Pension Fund for Globe House. The new scheme will link existing shopping centres to provide a 1m sq ft retail hub.
A series of interlocking ownerships and loans mean that Woking council, Surrey county council and Moyallen, which owns 700,000 sq ft of Woking retail floorspace, are behind the redevelopment.
The council has gradually taken control of a large slice of the town centre, recently paying £8m to the Lancashire Pension Fund for Globe House, part of the Bandstand Square development. It helps to open the way for a 120,000 sq ft retail redevelopment. The new scheme will link existing shopping centres to provide a 1m sq ft retail hub.
The first phase will see Marks & Spencer take a 60,000 sq ft store, which should be open for Christmas 2017.
Tim Buckley, asset manager at Moyallen, says: “Woking can do better than it has to deliver a broad retail offer, and an improved evening leisure offer. Of course, Guildford is only six miles down the road, and we are never going to turn Woking into Kingston-upon-Thames, and there is no point in competing head on with either. But we can deflect trade back to Woking from Camberley, Epsom and Brooklands.”
Work on public realm begins this year, with construction work on the main site starting by mid-2014.
