At a glance
• Boxpark opened in Shoreditch, E2, to great media interest in December 2011
• Thetemporary retail outlet, comprising shops in reclaimed sea containers, offers 60 units
• The outlet’s fortunes have improved, after a lean period, after improvements in branding and tenant mix were made
EG recently asked a senior retail agent his opinion of Boxpark, which laid claim to being the world’s first pop-up mall when it opened in London’s trendy Shoreditch E2 in December 2011.
And what an opening it was, greeted by a media fanfare with all and sundry flocking to see the chic, unique development that attracted independent and big-chain occupiers alike, lured by the idea of trading from reclaimed 40 sq ft sea containers. Boxpark certainly flaunted its USP. And such was the buzz around the development that talk of expansion was already being made by ?its owners.
So, 20 months on from this retail phenomenon docking in the capital, what is the agent’s opinion? “I think Boxpark is a noble failure,” he says. “By that, I mean it is a brilliant idea, cool in its execution and still of interest to many as a concept. I get many enquiries about it from my international colleagues.
“The problem is, does it make any money? I guess that comes down to whether there is sufficient footfall to sustain the business. They are probably ahead of their time and if they had located somewhere like Camden Lock or the South Bank then I think it would have been a roaring success.
“I suspect it is just about doing enough to survive and maybe one day it will thrive, so I expect copycat versions to spring up. The fact that they haven’t already probably tells you all you need ?to know.”
If these comments sound harsh, Boxpark founder and creator Roger Wade admits that since opening in a storm of publicity, the project has faced mixed conditions: from highs to lows, failed schemes and dreams and back again – he says – to success. A success which others are now, indeed, keen to copy. And he is keen to roll out.
“Twelve months ago we were quite bullish about the future of Boxpark, but the reality is, like everyone else, we experienced a bit of a downturn.”
Wrong brand mix, short-term tenants and tenants that didn’t perform well at the site, which has 60 units and a mix of food outlets, were to blame, says Wade. “We have replaced them with smaller independent tenants, and we have experienced a bit of a bounce back.
“The reality is when we first opened Boxpark for the Olympics, we did so with a fanfare and everyone and their mother was making us offers of collaboration. We were inundated. But then a sort of post-Olympic blues came. There wasn’t a major uplift in business for us during the Olympics and we worked really hard post-Olympics on our brand mix. We are experiencing a bit of an uplift now in terms of our occupation rates, which are up to nearly 100%.”
He adds: “We now feel we are starting to get our branding right… and we are experiencing a period where we are more confident about our future. As a result, we are looking to expand into other sites.”
To pursue these expansion plans, Wade has appointed CMW in the UK to look for urban sites in London and the South East with high footfall traffic. “Looking for high footfall sites sounds obvious, but because we are there temporarily we need to hit the ground running – we can’t afford to be building up the long-term asset value because there is no long-term asset value for Boxpark.
“We are not looking at provincial places, we want to hit the major urban areas in the UK, [and] we still feel there’s a hell of a lot of potential in London.” Wade admits being a “pop-up” means prospective sites need at least five years to make money. “The reality is because Boxpark is a temporary development it takes us at least three years to pay back the capital costs, and then effectively we are looking for profit in years four and five, and that’s going to be dependent on occupancy rates, so it’s financially not viable to look at lease lengths shorter than five years.”
More interestingly however, despite Boxpark’s tough times in the UK, Wade is looking at the US market, negotiating for sites in New York and Los Angeles, and has given the task of securing places to New York-based brokerage RKF.
“We seem to be getting a lot of positive feed back from the US, which is a market we are very interested in,” says Wade.
He adds: “If we were in a position 12 months down the line, what would we like to do? We would like to have two
Boxpark developments in the pipeline, one in the States either in New York or LA and one in the UK, probably London.”
However, cynics such as the anonymous agent quoted earlier, could be justified in wondering if anything will come of these latest announcements, given that Wade has made several other expansion proclamations in the past.
At the time of the Shoreditch opening, he said he aimed to have the format in Manchester and Birmingham by the end of 2013 – and that isn’t happening. And last year in a raft of pre-marketing media interviews, Wade revealed plans, complete with stunning images, for Boxpark Amsterdam. It would have full financial backing from Dutch-based property investment company Corio, he said.
Then in May, Corio pulled out and the scheme was scrapped. Corio said it pulled out of the project as it could not make it work “in the current difficult economic circumstances”. Wade, however, sees positives in the failure. “[It was] a blessing in disguise for us because it’s allowed us to focus on Boxpark Shoreditch and getting our proposition right.
“I don’t think we can revisit the Amsterdam project as I don’t think we have any credibility there, so we need to focus on new pastures, learn the operational lessons and then apply those to new venues.”
Wade can’t really be blamed for wanting to push out the Boxpark idea. Although his anonymous critic said there were no copycat developments, some are at least using the idea. Allied London’s proposal in February for a pop-up shopping village at Spinningfields in Manchester , was based on Boxpark (www.bit.ly/egiallied).
But, other developers beware: Boxpark is Wade’s baby, and he will fight hard for sole custody.
“The reality is that there are lots of wannabe Boxpark imitators [but] Boxpark’s IP is protected and we are looking at potential infringement to our IP from any other potential Boxpark-type sites in the UK. We are aware of two or three sites in which people are looking at similar developments.
“It’s simple – we would rather copy ourselves than let others copy us. Obviously the Boxpark concept is of great interest to developers, but the reality is that we are in a financial position to roll [it] out, and if anyone is going to roll out Boxpark, it’s going to be Boxpark.”
Becoming animated, Wade adds: “We are not going to sit around and let other property developers take our idea and run with it as their own!”
After the collapse of the Amsterdam project, Wade says there is enough money in the kitty for him to take charge of expansion.
“We are learning from the Amsterdam experience and we are happy to finance projects ourselves internally. When it is right we will bring on board JV partners, and certainly there is a situation where it makes sense to bring in a landlord who owns a site as the JV partner. If it’s just about bringing finance to the table then we can probably turn to [Boxpark investor and Carphone Warehouse founder] Sir Charles Dunstone for that.”
Wade is open and honest about his troubled times and he says he has learned and is learning from each mistake. Hence, looking for any new sites in high-footfall areas and being master of not only his own finances for these future developments, but also of the Boxpark concept.
Wade is now doing just what the market believes he should be doing, while at the same time, he says: “The reality is we are still learning our trade.”
Boxpark leases
Lease terms are based on each individual tenant. Some are offered turn over lease options where, says Boxpark founder Roger Wade: “We take a bit of a risk with the brand and for some people we do fixed rents. We also have flexible deals that we do with smaller tenants where we sometimes take turnover rents.”
Boxpark’s quoting rents:
• One month: £2,000,
• Three months: £5,000
• 12months-plus: £20,000 per annum
