Grosvenor’s Paradise Project has grownaccustomed to being king of Liverpool’s retail scene. Despite being just bare bones of steel, with a planned 1.65m sq ft of retail space on the drawing board, the title is deserved.
But a recent deal has thrown the crown into question. Land Securities took control of retail specialist Tops Estates this month, paying 515p per share. It now controls seven shopping centres nationwide, including, importantly for Merseyside, the Clayton Square centre.
At 250,000 sq ft, this city-centre scheme appears to be a fairly inconsequential chunk of the city’s 2.5m sq ft total. But it sits directly opposite LandSec’s other shopping centre, St Johns.
At present, the two face each other like old adversaries across a stark 100 yards of paving. At one end, St Johns is a 1970s retail centre with a firm eye on the value sector and, thanks to its first-floor market, it has one of the healthiest footfalls in Liverpool. At the other end is Clayton Square, a vision of domed glass and high-street names. Now they are set to become part of the same family, putting more than 650,000 sq ft of Liverpool’s prime retail space into the hands of one landlord.
So could LandSec be the new contender for Liverpool’s retail crown?
The company has remained tight-lipped about its plans for the two centres, saying that it is still too early to discuss details. ButLandSec could have made a sound investment. According to surveyor Gerald Eve, 125 retailers are looking for space in Liverpool and the city has one of the highest zone A rents in the country at £300 per sq ft.
In addition, LandSec has already said the Liverpool assets would “consolidate” its position in the market. Many retail experts believe the opportunity to redevelop a vast chunk of retail space in the heart of the city will prove irresistible. “It would certainly make sense to asset manage these two, and this acquisition puts them in a very good position,” said one agent, who asked not to be named.
Obstacles have previously lain in the way of expansion at Clayton Square, says Peter Burke, head of retail agency at Mason Owen. He says: “Tops tried to extend the frontage of Clayton Square onto Parker Street and enclose it at the Parker Street end but, because it was very close to the Land Securities scheme, that got knocked back.” Under single ownership, he adds, this suddenly becomes much simpler.
Karl Kiernan at Knight Frank also believes LandSec may choose to link the schemes.
Linking schemes could attract more names
“It could be a chance to get more localoperators in,” he says. “If some retailers are offered space within Paradise Street, then Clayton could become a more bespoke shopping destination, accommodating those retailers already in Liverpool that do not want to go to Grosvenor, ” says Kiernan.
The hardest part of the job could be reviving St Johns, which Kiernan describes as “tired and dated”. Although nearly 16m people visit St Johns’ 100 shops a year, average spend per shopper is just £12.27 per visit.
Zone A rents in St Johns are around £100 per sq ft. Clayton Square fares a little better, with zone A rents approaching £200 per sq ft, but that is still a far cry from Church Street’s £300, which many agents believe Paradise Street could top (see box).
Nick Young, partner at Strutt & Parker, and agent on the Paradise Project, remains unconcerned about the competition. “St Johns and Clayton Square appeal to a different customer at the value end of the market,” he says. “They will have control of more fascias in the city centre, but it is a very different marketplace.”
Timing will also be key. Plans to take away Grosvenor’s crown have centred on the fact that the Paradise Project will not open until 2008. But any extensive changes to either Clayton Square or St Johns could not be finished until close to Paradise Street’s opening date, if not beyond. And while there is little doubt that Liverpool is crying out for a major scheme, whether it needs two is debatable.
Mason Owen’s Burke remains upbeat. “Having two major schemes would create a hammerhead at either end of Church Street.”
With that comes the potential to create a truly regional centre, with regional draw. So, whatever LandSec decides to do, there are interesting times in store for the city’s retail market.
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With the market traders out of Church Street, the first signs of work on Grosvenor’s 1.9m sq ft Paradise project are starting to appear. Now thoughts are turning to lettings. John Lewis’ and Debenhams’ commitment to the scheme is already well documented but an air of mystery surrounds the third and smallest of the department stores. Grosvenor remains coy, saying the store will be high-end fashion but stressing that it will be one of the last chunks to be fitted into place. “Grosvenor is being very careful about extending people’s aspirations and then not delivering,” says Nick Young, Strutt and Parker partner and agent on the Paradise Project. But he adds: “The third department store is not massive and is more a boutique-style arrangement.” That would suit Harvey Nichols, which has already announced its intention to add as many as five boutique stores in the UK over the next seven years. A spokesman says the company is looking at Liverpool, along with other cities, but nothing has yet been decided. Young says attention is now focused on letting the medium-sized units, with names to be announced by autumn this year. Marketing of the remaining units will then start in the early part of next year. But the market has already started second-guessing names. Monsoon, which has been keen to relocate, will now move into the Etam unit in Clayton Square. It is believed that both Zara andTK-Maxx want to move, and Primark is keen to get space inthe city, although many agents expect both Primark and TK-Maxx are more likely to take the unit vacated by John Lewis on Church Street, rather than move into the Paradise project. A lot will depend on where Grosvenor pitches rents. Top rents in Liverpool now stand at £300 per sq ft zone A. “That might be a touch ambitious for Paradise Street,” says Peter Burke, head of retail agency at Mason Owen. “If demand is weak, they will have to be careful not to overcook it.” Young, however, maintains that Paradise Street will aim above the £300 per sq ft mark. “We are putting in an extension to the prime shopping area of Liverpool,” he notes. “And don’t forget we are talking about 2008.” Paradise Street vital statistics £750m development; 1.9m sq ft; 1.6m sq ft retail; 240,000 sq ft leisure; opens 2008. |
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Met Quarter Milligan’s 140,000 sq ft Met Quarter is set to open by the end of this year. It has already signed up Flannels, Armani, Hobbs and Boss, and is rumoured to be in talks with Nike. Warner Estates The developer bravely asserted last year that it would trump Grosvenor’s Paradise Street scheme with an 800,000 sq ft regional supercentre. The developer will combine its 470,000 sq ft The Grange shopping centre in Birkenhead and adjacent 168,000 sq ft Pyramids centre. It will open by Christmas 2007. |
