Analysts and investors like specialists. They’re easier to understand. So it was no surprise that Hammerson’s share price climbed – by an admittedly modest 3% – on this morning’s news that it was to pull out of offices and focus exclusively on UK and French retail.
But while focus is important, focusing on the right thing is even more so. Is retail the right basket in which to put all one’s eggs right now?
In property terms, the future of retail is already perhaps the most discussed topic of 2012: virtual vs real; high street vs out of town; the 25% of existing high street and shopping centre leases due to expire by 2013 – and 50% by 2015 – identified by Jones Lang LaSalle.
Even drawing those lines is slightly simplistic. There are high streets that thrive and there are those that will never recover. Similarly with shopping centres, which, in the UK at least, divide neatly into the top 50 and the rest.
So what’s Hammerson’s standing in those centres?
It’s not bad: its portfolio includes London’s Brent Cross, Birmingham’s Bull Ring, Bristol’s Cabot Circus, Croydon’s Centrale, Leicester’s Highcross, Glasgow’s Silverburn, Reading’s Oracle, and Aberdeen’s Union Square. That’s eight of the top 50, enough to form the backbone of a strong business, even if not all, including the Bull Ring and Cabot Circus, are owned outright.
But the future is far from certain.
The split – and if Hammerson was ever to focus it was always going to be along these lines given chief executive David Atkins’ retail heritage – may open the way to long-mooted bids from Westfield or even the Simon Group, which lost out to the Peel Group in seeking to cut a deal with Capital Shopping Centres last year.
Meanwhile, Hammerson may talk of an orderly disposal of its office portfolio, but rivals will already be seeking to pick off key individuals and teams.
It’s not that retail will be the big story of 2012: It already is.
Damian.wild@estatesgazette.com
