Ballymore is looking to sell a major Luton landholding. Could this provide a way forward for the delayed £200m Power Court retail development? David Quinn reports
After a protracted period of uncertainty stretching back more than five years, Ballymore’s £200m Power Court retail development in Luton appears to be moving forward – without Ballymore.
Luton council turned down the Ireland-based developer’s original plans for the scheme in 2008, claiming it did not integrate sufficiently with the rest of the town centre’s retail offer. A revamped application was expected during 2009, but throughout that year, and the year after, there were few signs of progress.
Just as local agents were beginning to wonder whether the scheme would ever happen, British Land looks set to rescue the development, and is said to be keen to work up fresh plans.
Mysterious intentions
Ballymore’s intentions for Luton have been something of a mystery during the past two years. Initially, it appeared the company was seeking to redesign the boom-era development in line with more modest prospects for financial return. It then seemed the developer – whose UK arm posted losses of £115m in the financial year ending March 2009 – was seeking a joint venture partner to drive the scheme forward.
But during autumn last year, it became apparent that the firm was seeking to sell its Luton landholdings outright, handing the potential development over to someone else entirely. Land Securities and Capital & Counties are believed to have been in the frame before British Land moved to the front of the queue during the final few weeks of the year.
Assuming the deal goes through, the outcome will be a welcome boost for the council. Unlike many other local authorities around the UK that have been forced to battle hard to stoke up interest in downturn-afflicted regeneration schemes, it has had a blue-chip developer walk on to its patch and express a strong interest in delivering.
“From our perspective, it’s good. British Land is a serious player, cash-rich and with a good understanding of the site, warts and all,” says Colin Chick, head of regeneration at Luton council. “It is sympathetic to the issues and problems we have raised in the past. We were keen not to see a scheme that was independent and inward-facing and would suck the life out of the rest of the town centre. British Land is taking a similar view.”
Ballymore declined to comment on Power Court. It is believed the company’s landholding totals around 30-40% of the overall development site, with a further purchase option on another parcel of land that is owned by a private landlord. The council is the other major landowner, while the Environment Agency also owns part of the site.
British Land is expected to acquire the Ballymore land outright for an undisclosed sum, but it declined to comment, describing the Luton link as “speculation”.
While it is too early to say what a new scheme will include, the indications are that a retail-led, mixed-use scheme of around 500,000 sq ft could be supported in Luton town centre.
For agents, the development cannot come soon enough. “The reality is that a lot of time and money has been spent assembling land and not a lot has happened,” says Lloyd Spencer, director of Lambert Smith Hampton in Luton. “That side of town is in need of regeneration more than ever.”
The revised Power Court will be integrated into the council-backed Station Quarter development, formerly known as Luton Gateway. A footbridge on the High Town side of the railway station, which opened in 2010, was the first part of the plan. A newly-built multi-storey car has also opened.
The long-term plan is to free up land alongside the railway line to enable residential and office development, which will link in with the retail offer at Power Court.
Most would agree that this part of Luton is in dire need of improvement. A recent survey by public transport consumer watchdog group Passenger Focus found widespread dissatisfaction with the station facilities.
The council and Network Rail have stated their commitment to improving the station. However, this will not be as easy to deliver as had been initially thought, because of the withdrawal of a £50m central government funding pot for station improvements that had been approved by former Labour transport minister Lord Adonis.
Assuming the work on these improvements goes ahead alongside British Land’s potential retail scheme, Luton’s regeneration will emerge from the downturn relatively unscathed, albeit somewhat delayed. That is a position that the council and the town’s agents will likely be happy to accept.
Developer goes nutty for Biggleswade
The market town of Biggleswade is not one that appears instantly synonymous with multi-million-pound commercial property deals. Its most famous association is with the family-owned Jordan’s muesli empire – a product that is still made in the town – rather than offshore real estate investments.
That changed last May when Jersey-based closed-end investment fund LXB bought a chunk of the town for the development of a retail park. It paid almost £23m to two separate pension funds for the Biggleswade Retail Park and a neighbouring retail unit, and bought a further four neighbouring plots from private landlords for an additional £16m. With fees, the total outlay was more than £41m.
LXB intends to revamp the 15-acre site, which houses 155,000 sq ft of retail, let to tenants including Laura Ashley, Argos and Matalan, and a further 90,000 sq ft of vacant space with planning permission for non-food retail. It has begun talks to redevelop the site, providing up to 250,000 sq ft of retail space.
According to LXB chief executive Tim Walton, the park offers “the potential to generate significant shareholder value”. As well as growth potential, the most obvious attraction of Biggleswade is the town’s link with the A1, which runs less than half a mile from the retail park site.
“Connectivity is very good. The main draw is Stevenage to the south and Bedford to the north. Additionally, in terms of retail warehousing specifically, we haven’t seen the big voids that have been seen elsewhere,” says Dan Jackson, surveyor at Lambert Smith Hampton in Luton.
Nonetheless, question marks remain around the timing of delivery. “It’s a good location, and it seems like an obvious thing to do, but you have to wonder whether it’s the best time to bring forward large-scale retail development,” says Jackson.
LXB declined to comment on its plans for Biggleswade, saying only that it is continuing to work up proposals and is not able to confirm any more details. Further announcements are expected during the next six months, by which time agents will be hoping the company will have submitted, or at least firmed up, its planning application for the site.
Dunstable plans await endorsement
A draft masterplan for Dunstable town centre, which was drawn up by Central Bedfordshire council, went out for consultation last autumn and was presented to the council in its final form in December. It is expected to be formally endorsed by the local authority early this year.
The plan includes a number of provisions for the expansion of retail and leisure facilities in the town by 2026, when the number of households in Luton and south Bedfordshire is expected to have increased by 23,000. Proposals include an additional 215,000 sq ft of retail, 170 dwellings and improvements to public realm.
Delivery of the proposals is contingent on the sale of the existing Quadrant shopping centre, which is being sold for £19m by Jones Lang LaSalle on behalf of the owner Glanmore.
Andy Lewis, the council’s lead officer on the masterplan, says that discussions have already taken place with prospective purchasers. “The council is extremely keen to work with any new owner of the Quadrant shopping centre,” he says.
“Additional housing growth within and around Dunstable will boost the number of potential visitors and support the renewal of the retail experience offered in the town centre.”
