This year has seen too many new retail schemes chase too few tenants. But, as Lauren Mills discovers, food retailers defied an otherwise difficult market.
Jan
The year got off to a shaky start as Virgin Megastore is awarded a rent of less than £150 zone A at arbitration for its unit at 527-531 Oxford Street, W1. Rubbing his hands with glee, Anthony Davies of Hillier Parker, which acted for Virgin, said: “This represents a mega-drop.”
Capital & Counties, faced with severe financial problems and no sign of an upturn, resorts to selling an 80% stake in its Victoria Centre shopping scheme in Nottingham to US company Dusco for £98m. The sale comes just in time to cut CapCo’s gearing in its December balance sheet.
Acting on behalf of the receiver, Edward Erdman sells the Tesco superstore at 20/28 Broad Street, Teddington for £2.5m off a passing rent of £181,885, rising to a guaranteed minimum of £334,556 pa in 1995 and £447,712 pa in 2000.
Indicating that retail warehouse parks may be this year’s favourite tipple, Edward Erdman lets three units at Mercury Asset Management’s Beacon Retail Park, Milton Keynes. Tenants now include Southern Electric and Comet and rents range from £9.25 to £10 per sq ft.
Signs that jewellery chain, Ratners, is in trouble come early in the year as pre-tax losses of £122.3m are announced and existing chairman, Gerald Ratner steps down.
Feb
A month of many closures: down-at-heel Ratners prepares to close at least 100 stores, EMI shuts shop at 200 branches of Rumbelow’s and the receiver puts 280 Tandem units on the market, signalling that retailers are having a tough time.
As M&S withdraws from the proposed Crowngate centre, Ipswich, MEPC abandons the scheme and development grinds to a halt.
Sun Alliance ditches its £70m Truro project.
Mar
The Chancellor, apparently ignoring the plight of the retailers, continues with his monthly VAT payment scheme for large companies, despite opposition.
But one man not to be daunted by current cries of gloom and doom is ex-Next man, George Davies, who launches his “magalogue”, Xtend, this month, perhaps in the hope that shoppers are now too depressed to venture from their homes.
Scottish Widows shows that some are still in the market to buy. It pays £12.5m for London Pavillion, which has a passing rent of £950,000 pa.
In a brave move, BICC Developments and LET start construction of Queen’s Arcade, Cardiff. The 140,000 sq ft scheme, which is due to open at Easter 1994, will provide 42 shop untis, plus two larger stores, one of which is prelet to Argos.
And in a £9.5m Cardiff shopping spree, the Widows buys 42,000 sq ft of shops, cinema and offices at Andrew’s Court and Andrew’s Buildings, Queen Street.
Apr
Several major shopping centres open, bad timing as, with still no sign of a pick-up, Mothercare and Habitat start a six-month pay freeze.
Royal Insurance Asset Management’s Sovereign Centre, Weston-Super-Mare opens. Rents are on turnover, with 15-year leases.
Another institution of sorts, the Crown Estate, opens its largest shopping centre investment, the 280,000 sq ft Crowngate, Worcester, at the request of the anchor stores which wanted to start trading as soon as possible.
The Peacocks, Woking, opens with only 10 out of 65 units trading; and County Mall, Crawley, has only two shops trading as it opens.
Bucking the trend, Royal Victoria Place, Tunbridge Wells, is 80% let on opening.
And, as retailers in the UK lose their fight against the Government over monthly VAT payments, retailers in the US record their worst year since 1961.
May
The centres keep on coming, but St Nicholas Shopping Centre, Sutton, opens with all 63 mall units still to be let. Main anchors Allders, C&A and Littlewoods do open, however.
A sign that retailers are becoming more demanding comes this month as Tandy pulls out of its unit in Chatham, Kent, because landlord Sun Alliance refuses to agree a break clause in its new lease. Tandy says that it will withdraw from other profitable units if landlords refuse to agree break clauses.
The strength of retailers’ bargaining power is further emphasised by the decision to allow an upwards/downwards rent-review clause in Boots’ new lease at UK Land’s Elephant & Castle shopping centre in south London.
The interest rate is cut to 10% and, while property shares go up, this has little effect on the retail market in general.
Mountleigh announces that negotiations to sell its Merry Hill centre in Dudley to the O’Connor Group have been ditched. This follows doubts expressed by Hammerson earlier in the year that the site may be included in the forthcoming contaminated land register. Unable to take the strain, Mountleigh crashes with debts of £500m.
PosTel is still in the market to spend: it pays £11.65m for the local authority interest in the Grosvenor Centre, Northampton, advised by Edward Erdman. At the same time, Burwood House dumps its 300,000 sq ft scheme for Swansea and Argent Group purchases two retail warehouse schemes, showing that retail warehousing continues to pull in the punters.
Drivers Jonas loses the Crown Estate instruction for its Regent Street property to Hillier Parker. Hudson Bay Clipper Co opens UK’s first drive-thru fish and chip diner at Willerby retail park near Hull.
Gateshead’s Metro Centre comes under attack from suspected INLA fire bomb.
Jun
British Land acquires Teeside Park, Stockton-on-Tees, for £22m, showing a yield of 10.5% – the biggest deal of its type.
And, for the first time in 20 years, nil increases are agreed at Crown Estate’s Chilterns shopping centre, High Wycombe.
Proving that, in spite of the recession, the Brits have not lost their appetite, cut-price food retailers Aldi, Netto and Kwiksave say that they are set to triple 1991 sales. This emphasises the fact that cost is now a primary concern to the food shopper.
Another company which thinks that the British are a hungry lot is US-based fast-food operator the Great Steak & Fry Company, which announces its intention to open six stores in the South East by the end of the year.
Also this month, Tesco opens its first Metro concept store in Covent garden.
Jul
Yet more bomb attacks threaten mainland retail targets. This months’ victim, Milton Keynes, is forced to close its town centre following discovery of three incendiary devices in the central area.
A survey by Debenham Tewson & Chinnocks and the Property Managers Association finds that Oxford Street is top location in terms of turnover, but the least successful in terms of profit.
Aug
In the hope of preventing further disruption from terrorists attacks, the British Council of Shopping Centres issues new security guidance notes.
British Telecom pays a premium, which is said to run into six figures, for a 7,000-sq ft unit at 51 Broad Street, Reading, from C&J Clark at £200,000 pa.
This figure equates to £140 zone A.
Sep
British Telecom, continuing its aggressive expansion programme, acquires a 9,000 sq ft unit at 24/24a New Street, Birmingham, at £205,000 pa (£120 zone A), again paying a premium and proving that retailers still have to pay premiums for the best pitch.
Also on the acquisition trail, Shelly’s Shoes takes the former Waterford Wedgewood unit at Oxford Circus, London W1, at a passing rent of £560,000 pa with 11 months rent-free.
Victor Ratner, brother of infamous Gerald, launches his own jewellery business – the first prototype to trade as the Jewellery Store in Kingston’s Bentall Centre, opening November 2.
Galleria shopping centre rocks the retail boat as it goes into receiverships with debts of £160m, just as Speyhawk Retail opens its Centre Court scheme in Wimbledon.
Keen to tap the UK food market, cut-price food retailers, Carrefour and Netto join forces for a UK buying alliance.
Optimistic that the British public still has money to spend on leisure, Lillywhites relaunches its Piccadilly Circus store after a three-year, £10m, phased refurbishment.
Earlier in the month, Touche Ross was called in as receiver to ailing bridal wear and ballgown company, Berkertex. By the end of the month the company was sold to engineering and clothing company, William Baird, for a price believed to be £3m.
Oct
Major chains are sold this month – Habitat to IKEA Foundation for £78m and 213 Richard shops to Sears for about £30m.
Ratners, still in trouble, begs for rent delay from landlord CIN Properties.
Yet another centre opens – the Buttermarket, Ipswich, notable because anchor tenant Owen Owen persuaded developer, Legal & General to increase the floor area of its store by 50% to 120,000 sq ft. Anchor tenants including Boots, Argos and Virgin are announced for Friends Provident’s Castle Mall scheme in Norwich, putting the development on target for opening in 1993.
Nov
The Bentall Centre in Kingston opens, attracting more foreign retailers than any other centre.
IKEA opens its new store at Purley Way, Croydon, with a bang on November 5.
Marks & Spencer confirm plans to open a 50,000 sq ft department store at Finsbury Pavement in the City of London, while closing its existing Moorgate food shop.
The Government announces that Sunday trading reforms are to be delayed for a year, but this fails to deter the main Oxford Street department stores which decide to open their doors on a Sunday for the first time.
A disastrous year for Gerald Ratner closes as his “crap” remarks finally catch up with him and he is ousted from the board.
