Plans are afoot to restore the former glory of the south of England’s first regional shopping mall. Capital Shopping Centres has submitted an application to extend its Lakeside scheme in Grays, Essex, by 325,000 sq ft, creating – at current levels – the UK’s third-largest retail destination.
Since opening in 1990, Lakeside’s dominance has been battered by the launch of Lend Lease’s Bluewater across the Thames in Kent. Now, Westfield’s Stratford City scheme in East London has opened a new front in the battle for diminishing consumer spend.
But, with two of the UK’s major retail destinations on its doorstep, will this halt the atrophy that has seen Lakeside drop down the retail rankings, and what will be its impact on the surrounding landscape?
From July to October last year, footfall at Lakeside fell between 5% and 10%, according to a CSC trading update. The developer/operator attributed much of that decline to Stratford City opening in the second half of that period.
While significant institutional lease renewals and new signings are still happening – including a recent flagship Arcadia store and US fashion chain Forever 21 – Q3 deals were done at 10% less than ERV.
If Thurrock council grants permission for the extension, construction could begin on site in 2013, with 40 new shops in place by 2016. Given that the general consensus is that it will be 2014 before light is seen at the end of the consumer spending tunnel, its timing could be perfect.
“When Westfield Stratford opened, it raised the bar in the region to a new level. Other landlords have to consider their holdings and get them up to standard to compete,” says James Ebel, partner with niche retail agency Harper Dennis Hobbs (HDH).
However, while Stratford City provided the incentive for activity, Ebel says that CSC had been considering extending for years, as a natural consequence of not wanting the grass to grow under its feet. “Landlords continually react to retailers and want to bring in the latest fashion brand to create a unique point of difference – even if it only ensures exclusivity for a short period of time,” continues Ebel.
CSC’s director of asset management for the southern region, Jonathan Ainsley, confirms this. “This has been in the pipeline for a number of years, but the planning regime has only just come into place to allow retail expansion to take place. A core strategy is about to be adopted for Thurrock and the wider basin area.”
At a special meeting held on 21 December, Thurrock council formalised the core strategy, which recognises the wider Lakeside basin as a strategic employment growth location.
Radical action
In the past 15 years, depending on which figures you look at, Lakeside has slipped from second-largest shopping mall in the UK to seventh. In 2007, CSC completed a £30m refurbishment, rebranding the old Pavilion as The Boardwalk and adding 60,000 sq ft of new retail and leisure space. While Lakeside undoubtedly has a seat at the top table, more radical action is required if it is to become guest of honour.
It hopes that investing £180m in enlarging the mall to more than 1.7m sq ft will turn the tide in its favour. “It is all about ensuring shoppers’ visits are as exciting as they were 10 years ago, giving them the opportunity to spend longer in the centre and to make Lakeside a true regional centre,” says Ainsley.
Given that there are 11m people with a potential £54bn worth of retail spend within a 70-minute drive, it can easily be argued there is enough cake for everyone.
Ainsley adds: “We anticipated a hit from Westfield Stratford, but it was actually nowhere near what we thought it would be. Retailers will tend to take space here as well as Stratford. Westfield fulfils the needs of east London. Our heartland is Essex, Colchester, Suffolk, etc.
“Longer term, we anticipate a 1% impact on our catchment in overlap areas, such as Romford,” claims Ainsley.
This is borne out by Buckinghamshire-based retail analyst FSP. Managing director Geoff Nicholson expects the impact on Lakeside from Stratford City to be relatively minimal and does not necessarily attribute the drop in footfall between July and October to Westfield’s Stratford opening.
He notes that footfall decline on Oxford Street and the West End in October and November was “absolutely horrific”. He adds: “Life is tough on the high street – full stop. I am not entirely sure all of Lakeside’s fall is due to Stratford.”
Ainsley confirms that there is a 6% overlap between Lakeside and Lend Lease’s Bluewater scheme, but as Bluewater has a John Lewis, there is a proportion of Lakeside’s catchment that bypasses it en route to shop at the partnership.
CSC maintains that the extension is based on existing latent demand, not merely a case of “build it and they will come”. The Thurrock Retail Study, carried out in 2007, identifies a capacity gap of up to 370,000 sq ft for comparison shopping floorspace and a further 167,000 sq ft of bulky goods and convenience formats by 2021. Within the wider basin area, URC Thurrock Thames Gateway Development Corporation estimates that up to 1m sq ft can be sustained.
In addition, retailer requirements constantly evolve. Additional space will help place existing tenants into updated and more apposite formats, secure future lease renewals and also attract new retailers to the centre.
“Retailers all want to upsize and take larger stores. Bluewater wished it had planned for larger units and that is what Lakeside is addressing with this application,” says HDH’s Ebel.
But the aspiration for the area as a whole extends beyond CSC’s plans. The council and URC want to transform the whole Lakeside basin into a “shopping city”, to quote FSP’s Nicholson. There is already 4m sq ft of retail and leisure space in the Lakeside basin area, making it a larger retail area than both Bluewater and Stratford combined.
Extending the retail offer in the basin, diversifying the mix to include leisure and office space and promoting it as a sub-regional centre for employment could create up to 8,000 additional jobs.
Part of this aspiration is to connect Lakeside mall into the surrounding shopping provision, namely Lakeside Retail Park and The
Junction retail park. “This linking is really interesting. Retail parks have upped their provision for shoppers, such as food and beverage and – to some extent – Lakeside may feel the need to respond to this. Maybe there is some concern that shoppers might use its parking and then buzz-off to the retail parks,” says Nicholson.
The wider proposals of the Core Strategy will create a new bus station, which links into the railway station at Chafford Hundred. A hopper bus service will serve the basin area, facilitated by new infrastructure linking the shopping centre to the surrounding two retail parks, which includes east-facing slip roads into Lakeside from the A13.
Ainsley comments: “This should encourage shoppers to visit the whole basin area on a more regular basis. Dwell time at the shopping centre is about 2.5 hours, which is quite high. We are looking to evolve the shopping offer to meet the aspiration of shoppers by introducing leisure and other non-retail.”
However, the 2006 Regional Spatial Strategy recognises the potential threat an enlarged Lakeside poses to Grays town centre. Thurrock council’s Core Strategy document states: “In accordance with the RSS, the council will ensure that much-needed investment in the future of Grays town centre, in particular, will not be prejudiced by a policy option of allowing the development of net additional retail floorspace at Lakeside.”
To an extent, the future of Lakeside rests on the rejuvenation of Grays. “This proposal is not just a knee-jerk reaction to Stratford – it is much bigger than that,” says Nicholson.
