If you spent a Saturday shopping or eating in Allders of Croydon in the late 1980s, I’d like to apologise. I wasn’t the most dutiful of sales assistants in the conveyor belt of sports concessions that once graced the store.
Nor was I the most competent of waiters in the carvery. But I will pause for a moment of quiet contemplation at 6pm today when the department store is expected to close its doors for the last time.
More than an isolated incident, the demise of what was once a thriving store in a buoyant town centre tells a story of a retail industry – and a national townscape – which is increasingly experiencing desperate straits.
Speaking at this week’s Estates Gazette distressed property summit, Mark Williams, chair of the Distressed Retail Property Taskforce, summed up the national picture with a barrage of stats: one in five shopping centres is in breach of loan terms, one in every seven shops remains empty, capital values are down by at least a quarter, and rents in some centres have more than halved.
“There’s too much space, it’s too expensive and it isn’t what retailers want,” said Williams, a partner in Hark Group, devastatingly. (That said, Primark, which opened a 82,400 sq ft store on Tottenham Court Road to familiar, enthusiastic crowds on Thursday, may disagree.)
The taskforce will report next year and, like Mary Portas, will find there are no easy answers. But it’s clear that co-ordinated action is the only way forward. My call to arms on this page last week drew an encouraging response: there is a real willingness to engage among landlords. Occupiers and others need to get on board too.
I did leave an essential group off that rallying cry: banks.
Their distressed portfolios contain significant chunks of secondary retail space up and down the country. Their unwillingness to write down the values of these assets is leaving town centres in limbo.
Politicians need to help them find a solution.
If government was to pick 10 towns suffering from retail blight and instruct the banks to prioritise sales of retail assets in those locations, it could unlock the door to renewal.
Yes, this would hurt balance sheets. But if ministers were to make this politically acceptable by pointing to a wider societal need as the driving force behind such limited, targeted action, markets would not be so spooked. And then, at last, we could begin to move on.
If there’s stasis in retail, there’s been a flurry of activity among other propcos where bond issuance and tighter focus are the orders of the day.
Quintain geared up to exit secondary property this week by bringing to market a regional portfolio of 24 offices, shops and sheds; its focus on London will sharpen. British Land, meanwhile, elected to hold on to its 50% stake in giant Sheffield shopping centre Meadowhall. It was more of a surprise that it could have considered anything else: it is a strong asset that fits the REIT’s strategic focus.
BL is among the property companies to tap the bond market in recent months, as have Great Portland Estates, Hammerson and, last week, French REIT Klépierre. Capital Shopping Centres is the latest to join the party, offering £300m of senior, unsecured convertible bonds in the business. The reason is simple: the dearth of bank debt for good customers on acceptable terms. The bonds’ popularity is clear: all, so far, have been oversubscribed. The upshot? Issuance will continue, but expect bond prices to rise.
Good to see LandAid gathering momentum as it seeks to position itself as the property industry’s charity of choice. In newish chief executive Joanna Averley, Mike Slade has found someone with an enthusiasm and commitment to match his own. Donations are up 40% to £1.4m, and £1m will be donated to projects focused on disadvantaged young people (p105) over the next 12 months.
Estates Gazette will be supporting LandAid Day on 11 October. To get involved – and you really should – go to www.landaid.org.
