When dealing with any development, it’s all about the numbers. Getting the size of your anchor store wrong by 3,658 sq ft on your own planning application isn’t ideal. This error equated to 10% of the ground floor of a 94,000 sq ft Next unit and is, some may argue, embarrassing. Even more embarrassing is to have council planners point it out.
This was not the best moment in the five months (and counting) since £150m plans for the 12.5-acre Castle Acres extension to Leicester’s Fosse shopping park reached Blaby district council planners.
The 337,000 sq ft development – on the former Everards Brewery site – is being promoted by the brewery, the Crown Estate and retailer Next. The scheme, anchored by the two-storey Next Home and Garden, a second anchor and a 34,000 sq ft TK Maxx, has a long history.
It has been fermenting for at least 13 years, since Everards first signed an option with Fosse’s then owners. It could be bubbling for a while yet, thanks to a dispute about another set of numbers.
These numbers are in the retail assessment – a 178-page monster document produced by consultant Quod and subjected to criticism by fellow consultant WYG, which is advising Blaby council. It is complicated, but boils down to the possibility that some research assumptions mean that the Fosse proposal could seriously underestimate the retail impact of the new scheme (seep100).
The Crown Estate – which agreed to buy the 26-unit extension in August – declined to talk to EG about the application, or what comes next. A spokeswoman said: “We are mindful that the planning application has only recently been submitted and we do not want to pre-empt the outcome.”
During the summer, Hannah Milne, head of the Crown Estate’s regional portfolio, said: “This key strategic acquisition unlocks opportunities for further investment to enhance Fosse Park’s position as a truly best-in-class asset, providing visitors with one of the best shopping experiences in the UK.”
Stephen Gould, managing director at Everards, the brewer whose plan this is, also declined to talk. However, EG has received a statement from the promoters of the Castle Acres scheme, which says: “Discussions with the council are ongoing and we hope that the application will be determined by Blaby’s planning committee later this year.”
Without this development, it will be difficult for the brewer to complete its long-planned move to a new brewery and associated visitor centre and leisure development at Soar Valley Way, Enderby.
Outline planning consent for a 147,000 sq ft development was granted by Blaby council in June this year, three years after the application was submitted. Everards owns 86 acres at Soar Valley Way.
For Hammerson, the prospect of a Fosse Park extension may provoke – at best – mixed feelings. It acquired the remaining 40% in Leicester city centre’s 1.15m sq ft Highcross shopping centre for £180m just over a year ago.
Highcross is anchored by John Lewis, Debenhams and House of Fraser, and since its 2008 refurbishment and extension, the centre has established itself as Leicester’s prime retail destination. Could it now be at risk from the new Next at the Fosse extension?
The Fosse extension’s promoters say it will generate turnover of about £115m by 2020, but will not seriously hurt existing centres. They claim just 5% will be shaved off city centre turnover during a period that will see Leicester city centre’s turnover grow by 31%. They draw the conclusion that the small deflection caused by the Fosse extension is not enough to worry about – there is plenty of spending to share around.
Meanwhile, Leicester city council has been watching the argument over the Fosse extension’s retail impact closely. Pete Cooper, Hammerson’s director of asset management, hints that the council needs to keep investing in city infrastructure if city centre retail is to hold its own.
“Future retail prosperity for Leicester will depend on strong leadership from the council and elected mayor,” he says. “Many infrastructure improvements have already been delivered in the city and it is important that the benefits of these and future improvements are widely promoted and leveraged to provide a compelling, high-quality retail experience for the catchment.”
In the meantime, Hammerson is beefing up the Highcross offer with international fashion retailer Khaadi and global jeweller Thomas Sabo.
Matthew Hannah, director at Innes England, says Hammerson will have already factored the park – and plans for an extension – into its current strategy. “Next will drag people from a wide catchment, too,” he says. “It will be pretty special – a category killer.
“Fosse Park was there before Hammerson completed the Highcross refurbishment, and it runs beside the city centre as a retail location. The extension may lead to a small displacement of spending from the city centre, but Hammerson will have known that.”
Fosse Park is popular with shoppers – so a mighty Next store can’t do it any harm. The Crown Estate has not invested on a whim, but it must be wondering if the current planning application will make it – and, fingers crossed, hoping it has got the maths right.
Fosse facts
The Crown Estate teamed up with Chinese sovereign wealth fund Ginko Tree Investment to buy Leicester’s Fosse Park for £345.5m in August 2014. The 560,000 sq ft scheme was sold by Irish investors Abbey Group and Foyleside.
Fosse Park, which opened in 1989 and is anchored by Marks & Spencer, has 40 shops spread over 37 acres and attracts as many as 12m visitors in a good year.
The Crown Estate has since acquired other East Midlands interests. In April, it agreed a £140m deal to fund the Rushden Lakes shopping and leisure scheme in Northamptonshire, acquiring the site from LXB Retail Properties.
Meanwhile, in Derby…
It is a year since intu took over Derby’s former Westfield Centre. The £867m deal, first agreed in spring 2014, delivered a further 1.3m sq ft to the 2m sq ft intu East Midlands portfolio.
Martin Breeden, regional director at intu, says: “We came from a good base in Derby, but there was plenty to do on the retail mix. The centre could attract more brands.”
New arrivals include Map, Office shoes and a Miss Selfridge franchise. “Now we’ve got to build up the catering offer,” says Breeden. “We have added Zizzi and Joe’s Kitchen, and Yo Sushi is fitting out now, but there is more we can do to create a good evening vibe.”
Re-using car parking space – watch out for a new bowling alley operator – will help, he adds.
Local reaction has been good. Ben Taylor, head of retail agency at Innes England, says there have been improvements in vacancies around the centre.
“In recent months, we have completed a number of lettings in Crown Walk, a covered parade forming one of the principal access routes into intu Derby, resulting in one remaining unit,” he says.
Taylor says that, working with joint agent Barker Proudlove, the duo have completed deals with Fulton Foods and Healthy Route and secured a lease renewal with Specsavers, which has almost doubled the size of its store.
Out-of-town looks strong, too. Wheatcroft Land has planning consent for a 32,600 sq ft retail park at Burton Road on the city centre fringe. The park will be anchored by a 15,000 sq ft Aldi supermarket with four further units.
Pesky numbers
How much impact the Fosse Park extension will have on Leicester depends on what numbers you use, and what assumptions are made.
The developer’s consultant, Quod, disagrees with the council’s adviser, WYG, on what those assumptions are and what numbers you end up with – sometimes by a wide margin.
WYG says Quod assumed that the second anchor unit – totalling 38,800 sq ft – would trade at fairly modest levels. WYG believes it could trade at least as successfully as other stores at Fosse Park, and does not understand why Quod assumes it won’t.
WYG appears to be baffled by Quod’s claim about where customers will come from. For instance, today 8% of Fosse Park’s turnover comes from Hinkley – but Quod assumes the new unit will attract only 5%.
Meanwhile, the busy west Leicester area contributes 15.1% of today’s Fosse Park turnover, but Quod assumes it will be 17.5% at the new extension.
Quod did not respond to EG’s invitation to discuss its findings.
