From his palatial office on the 30th floor of Westfield’s Sydney headquarters, Steven Lowy is busy masterminding the global retail developer’s latest controversial development plans – the takeover of London.
Already the owner of the capital’s two most important, and influential, shopping centres – Westfield London and the Olympic gateway, Westfield Stratford – Lowy wants to add another prominent site to his stable.
“Croydon is a very important part of London, and it’s a great opportunity,” says Lowy, who along with his brother Peter, took over as joint CEO last March. In his friendly, but businesslike, manner he adds: “The people of Croydon have not had acceptable retail and leisure facilities for a long time.”
This is no idle chat. The Lowys, who took the helm from their father, Westfield co-founder Frank, are pulling out all the stops in their bid to wrest control of the redevelopment of the 633,400 sq ft Whitgift shopping centre from rival developer Hammerson.
Developer conflict
In April, Westfield, which has 118 centres in Australia, New Zealand, the UK, the US and Brazil, and has an investment portfolio valued at AU$61bn (£40bn), signed a development agreement to redevelop the shopping centre with the Whitgift’s freeholder, the Whitgift Foundation. However, this puts it in direct conflict with UK developer Hammerson, which had already been picked to manage and redevelop the mall by Royal London Asset Management and Ireland’s IBRC Assurance Company, which together own 75% of the long lease.
Hammerson has the additional advantage that it owns the adjacent Centrale shopping centre, which it hopes to incorporate in its rival plans, due to be submitted to Croydon council this week.
“It’s competitive,” says Lowy. “We have an arrangement with the Whitgift Foundation. The other partners have made an arrangement with Hammerson. Clearly both of those are in conflict with each another and are competitive with one another and I suppose over time that has to be resolved for the appropriate outcome for the people of Croydon.”
Earlier this month, Westfield staged a public exhibition to show off its £1bn plans for the outmoded shopping centre, which include 1.5m sq ft of shops and restaurants; leisure facilities including a multi-screen cinema and bowling alley, new public realm improvements; 400-600 new homes; and car parking spaces.
Charm offensive
Last week, it continued the charm offensive by handing Croydon council a survey of more than 1,300 local people which it claims shows that 90% of those questioned want to see Westfield develop the mall.
Lowy is banking on the popularity and success of Westfield’s two established mega-malls – Westfield London, opened in White City in 2008, and Westfield Stratford, opened next to the Olympic Park last year – to persuade Croydon planners that his plans for a 1.3m sq ft shopping centre should go ahead on the site instead of Hammerson’s. The two sites are attracting up to 60m visitors a year, with annual sales of £1bn.
“We are very confident that we would be able to bring first-class retail and leisure facilities to people in and around Croydon,” says Lowy.
In the last financial year he earned £5.7m in bonuses and fixed pay, while the company saw net profit rise 37% to A$1.53bn (£1bn) in 2011.
Given this level of success, and the company’s obvious determination to achieve a hat-trick of London malls, it is perhaps unsurprising that rumours are circulating of just how far Westfield will go to achieve its aims.
At the suggestion that Westfield could stage a takeover bid to buy Hammerson, Lowy laughs. “All of this is speculation. Like Hammerson, we are a public company and cautious about our public statements until we are confident about the outcome.”
He is similarly tight-lipped when asked whether Westfield and Hammerson could take on the Whitgift project as a joint venture, after Hammerson’s retail managing director Lawrence Hutchings publicly suggested earlier this month that the two companies should “join together”.
Whatever the outcome in Croydon, there is no question Westfield has put its stamp on the UK. “We have been there since 2000 and I think we have changed the landscape of retail and entertainment, especially with Stratford City and Westfield London, which have been enormously successful,” says Lowy. “They are global best-practice properties and they have created an important platform for Westfield not only through the UK, but also into Europe.”
And Lowy doesn’t see the tough retail market as a block to further growth in the UK. “It is not unusual that over time Westfield has expanded in more difficult environments. We are a strong organisation, we have enormous capacity, well recognised by the financial organisations and the retailers. So when others are not in a position to execute buildings of this scale, we are. And so often in these more difficult times you can get great opportunities.”
Westfield is looking at other UK sites, Lowy says, although he won’t reveal where.
For now, the next confirmed development is Westfield Milan, which is only the start of the company’s European expansion plans, despite the eurozone crisis. “We are seeking further opportunities in Europe based on the expertise we have created out of our London office. We do studies of where we want to be and we have clearly highlighted a range of cities we think would be appropriate for major Westfield shopping centres.”
Outside of Europe, Westfield is taking things more slowly. Lowy confirms the Middle East “is not really on our agenda”, and neither is India, although China remains a possibility.
In the UK, however, the talk is not all of expansion. In February, Westfield sold its stakes in three centres – in Tunbridge Wells in Kent, Guildford in Surrey and Belfast in Northern Ireland – as part of a strategy to concentrate on its larger assets.
And the company’s stalled 550,000 sq ft Broadway shopping centre scheme in Bradford, West Yorkshire is still a hole in the ground eight years after development began.
Work started in 2004 but was halted four years later owing to the global economic downturn. Last week, Marks & Spencer and Next agreed to join Debenhams and anchor the £275m shopping centre, taking 63,000 sq ft and 32,000 sq ft respectively. But Westfield says it still requires further prelets before it can get on with development.
Lowy seems mildly frustrated at the question about the future of the northern city. “Yes, yes, we are planning to pursue Bradford still,” he says.
“It has been delayed due to the global financial crisis, but our plans are to continue to progress the development. There is no timescale, but at present it is being progressed from a pre-development perspective and a pre-leasing perspective and we will soon be in a position to get going on that development.”
Lowy’s olympic dream
With its 1.9m sq ft mega-mall adjacent to the Stratford Olympic Park opening last year, Westfield is perhaps the developer set to profit most from this week’s Games.
Lowy and his top executives have flown to London to join in the fun and celebrate the success of the £1.4bn Stratford City shopping centre.
“From a corporate perspective, it is a unique opportunity. We will get an unprecedented amount of customers in a short space of time. So, it tests the company: How good will we be with regards to security, to cleanliness, to the customer service that we will provide?”
Despite the attention the Olympics will bring, Lowy makes it clear that the company did not build its Stratford centre because of the Games.
“We built Stratford because of the enormous demand from the people that live in and around Stratford,” he says.
“What the Olympics did was fast-track the approval process and the development of infrastructure.”
With the Lowy dynasty flying to London for the Games, what is Steven Lowy’s Olympic dream? “Seeing Australia win swimming gold medals,” he says.
