Cambridge continues to punch well above its weight as a retail and leisure destination, buoyed by a booming M11 economy.
“Demand has always been strong for Cambridge, but its historic centre has restricted development,” says John Percy, Cushman & Wakefield’s head of retail and leisure development.
This is underlined by figures from local agent Bidwells, which state that at the end of 2015 availability of high street retail units in Cambridge stood at just 5%, with 563,000 sq ft of demand vying for just 70,800 sq ft of space.
Not surprisingly the result has been a significant boost in rents. The year ended with prime zone A rents at £290 per sq ft. That breaks the £280 per sq ft record set in 2007 and signifies a 20.8% hike since the beginning of 2014.
John Lewis-anchored Grand Arcade shopping centre continues to benefit from constrained supply. March saw the opening of Victoria’s Secret, leaving the centre with just one vacant unit.
Demand also continues unabated from leisure operators. Recent restaurant arrivals include Thai brand Thaikun, which took space at Quayside, and Vietnamese street food restaurant Pho, which is reported to have paid a significant premium for space on Wheelan Street.
Fleurets’ Simon Jackaman says: “There are at least half a dozen restaurant chains trying to get into Cambridge. Many have taken former retail units, while others have had to compromise with multiple floors and basements.”
On the back of the seemingly insatiable demand, Legal & General and Wrenbridge are drawing up plans to rejuvenate the city’s Grafton Centre. The 500,000 sq ft mall, purchased from M&G in May 2015, was once the city’s greatest retail draw, but since 2007 has played second fiddle to Grand Arcade.
Legal & General is yet to unveil its plans, though an announcement on the refurbishment is imminent.
Yet despite the weight of demand, the success of any Grafton Centre investment programme is no foregone conclusion. The mall, situated to the east of the city centre, has always been considered off-pitch and previous owners have tried but failed to get a redevelopment off the ground.
There is a question mark over whether it will remain predominantly retail, or use the fact it has an adjoining Vue cinema to help anchor a new leisure-led destination, is yet to be seen.
Baker Storey Matthews’ Ben Green says: “There has been a lot of residential development underway to the east of the city and the scheme’s proximity to Anglia Ruskin University means there may be an opportunity to appeal to a younger, trendier market.”
Ipswich
Ipswich is viewed by many as Cambridge’s poor relation. It may boast a John Lewis, but it is significant that in 2012 the retailer chose to open its John Lewis at Home store outside of the city centre at Futura Park.
After years struggling to compete with out-of-town consents and stronger neighbouring centres, the centre of Ipswich has failed to live up to its potential.
According to Bidwells, at the end of 2015 high street retail availability stands at 22% with just 154,000 sq ft of requirements. As a consequence, zone A rents are languishing at £110 per sq ft, still some way off the 2007 peak of £160.
However, the agreement of a new Ipswich vision is beginning to bear fruit.
Led by the local BID, Ipswich Central focuses attention on revitalising the central district. Highlights include plans to improve connectivity between the town centre and waterfront, building new homes and developing a new retail strategy.
Ipswich Central chief executive Paul Clement, says: “We need to find ways of attracting new retailers and leisure operators. There are names who aren’t currently in Ipswich but would like to be and we need to find ways of accommodating them.”
The redevelopment of two Ipswich shopping centres has certainly helped the cause. Capital & Regional is undertaking a refurbishment of the 230,000 sq ft Buttermarket. Due for completion in July, the £35m redevelopment will incorporate reconfigured units for existing tenants New Look and TK Maxx, a 12-screen Empire cinema, Pure Gym and nine restaurant units.
“We wanted to create a retail and leisure hybrid,” says Capital & Regional’s Ken Ford. “We’re in conversation with operators for all the restaurant units and hope to be 100% let on completion.”
Meanwhile, in late 2015 LaSalle Investment Management completed the refurbishment of Ipswich’s former Tower Ramparts shopping centre, rebranded Sailmakers.
LaSalle has renewed a lease to Topshop and attracted new names such as BB’s, Subway and jeweller Pandora. The centre is 82% occupied and LaSalle is in discussions with a range of retailers and leisure operators for the remaining units.
LaSalle’s James Boyd-Phillips insists the two shopping centres sit well together. “Buttermarket is pitched at the comparison end and Sailmakers more aligned to convenience. They provide a boost to Ipswich, which is now in far better shape.”
Bidwells’ James Lankfer adds: “The new owners of the centres are taking the opportunity to rebrand and push the offer. There has traditionally been a lot of competition from out of town, but once they persuade a few retailers to commit others will follow.”
Peterborough battle lines
A court battle is looming over the future of two of Peterborough’s key development projects. What could it mean for the revival of the town’s retail and leisure market?
Peterborough has access to an affluent catchment area and is experiencing huge population growth. The town centre has for years lacked investment, leaking spend to the likes of Cambridge and Leicester. It offers an attractive opportunity for developers keen to accommodate new names.
The problem is that, like buses, a long wait has been followed by two developers proposing two competing schemes at exactly the same time.
In September 2015 a planning meeting in Peterborough saw consent granted to two cinema-anchored projects within a town centre which can only accommodate one.
Planning committee members first gave approval for a 77,000 sq ft extension of Invesco and Lendlease’s Queensgate shopping centre, incorporating a reconfigured John Lewis store, larger unit for Next, 11-screen Odeon cinema and seven-unit food court.
Minutes later the green light was given to Bristol developer Hawksworth Securities’ plans to redevelop a chunk of derelict land at North Westgate, creating an eight-screen cinema, retail, restaurant, office, residential and hotel space.
Hawksworth has since voiced concerns that its new leisure quarter is unviable if the Queensgate extension goes ahead and is appealing for a judicial review to force the council to reconsider its decision. It argues that Queensgate does not benefit from a policy allocation and in making the development of North Westgate unviable, would prevent the regeneration of a key city centre site.
Hawksworth’s Peter Breach is hoping the review will be heard in June. He says: “It’s acknowledged on all sides that there is only room for one multiplex cinema in the centre of Peterborough. Without a cinema our plans for North Westgate would be scuppered .”
He adds: “We’re not happy to be at odds with the city council and Queensgate but feel we have no other option.”
In response the Queensgate owners have submitted a second duplicate application for their extension in case the council is forced to reconsider its planning decision.
Lendlease’s Guy Thomas says: “Subject to our second application receiving consent, our plan remains to begin work on the extension this year.”
Since the centre’s change of ownership in 2014, 15 new brands have leased space and Thomas says they are in detailed discussions with operators for two of the extension’s new restaurant units.
He adds: “We have the full support of John Lewis, Next and Odeon, and demand for the new retail and restaurant units outstrips supply.”
But for Peterborough to exploit that demand, the planning squabble needs to be resolved.
“It’s all a bit of a mess”, says Barker Storey Matthews’ Julian Welch. “At present neither scheme is progressing and Peterborough is losing out. The best outcome is a resolution, whichever way that might fall.”
