More than 15 years after initial plans to transform Croydon’s retail centre were conceived and seven years after outline plans to create a new Westfield in the south London suburb were permitted, the £1.4bn dream is over.
This week, a Post Covid Vision for the Town Centre report was delivered to Croydon Council, formally confirming that plans for the long-awaited Unibail-Rodamco-Westfield and Hammerson shopping centre had been axed.
The news failed to surprise the industry in light of the many delays and setbacks that the scheme has suffered in the eight years after the shopping centre giants teamed up on the redevelopment.
Following a few early stumbles in the planning process, the Croydon Partnership had started to look like it was making progress on the scheme, getting consent for a bigger project in 2018 and securing John Lewis as an anchor. The letting was heralded as a watershed moment for the scheme, after more than a decade of talks to get the retailer into the town centre.
Then URW hit pause on demolition works at the Whitgift Centre in 2019, before removing the development from its books in February last year, as a project that required significant “modifications” until investment costs and delivery timeframes were “finalised”.
Despite the revisions, the 1.5m sq ft retail and leisure scheme had quickly become outdated in the face of changing shopping habits, even with the addition of nearly 1,000 homes.
“Every stakeholder in Croydon would agree that plonking a big spaceship, inward-looking shopping centre into the middle of Croydon might have been the dream answer 10 years ago, but it’s not today,” URW UK chief operating officer Scott Parsons told EG in an exclusive interview last year.
“We all know the scheme is going to change,” he added at the time. “You don’t stick something in your official financial results that talks about a scheme you know you’re not going to deliver in the same format.”
And in another blow for the redevelopment, John Lewis confirmed earlier this year that it had no plans to open a new department store at the Croydon centre. The retailer itself has closed a swathe of shops during the pandemic, spanning more than 1.4m sq ft in total.
A casualty of the climate
Industry sources have labelled the scheme as a victim of the market climate, with structural changes sped up by the pandemic.
“Like a lot of these projects, a mixture of things went wrong,” says an industry executive who did not wish to be named. “I’m sure the council, URW or Hammerson could have moved faster to react to structural changes, I’m sure John Lewis could have moved faster, but at the end of the day, the reset in capital values and acceleration to online has made things very hard for everyone.”
Plans to redevelop the town’s aged Whitgift Centre, bringing it together with the Centrale shopping centre and the former Allders department store, have cost thousands of hours of work and many millions of pounds in costs.
Croydon Council secured an almost £310m loan for the project, which it had expected to service easily through future business rates delivered through the scheme. Those business rates never came in. The debt remains. The council also points out that the compulsory procurement order compensation costs for the ill-fated project continue to rise.
“It’s a bit of a tragedy,” says the insider. “Millions of pounds have been spent to get it to this point, with nothing to show for it. Croydon desperately needs regeneration – it has lost 10 years, and it might take 10 more years to make something happen.”
But despite the numerous costs, the council isn’t ready to give up entirely.
Another wait on the cards
Whether Hammerson or URW have the balance sheets to continue with the redevelopment, after suffering years of valuation declines against a backdrop of increasing build costs, is another matter.
According to the report, the landlords have said they both need more “time to work through what this will mean for Croydon and the Whitgift”, while each re-evaluates “their assets and business strategy” in the fallout from the pandemic.
Another long wait appears to be in store, then, before the future of the development becomes more certain. Hammerson’s own business strategy prioritises cost-cutting and “non-strategic” asset disposals, ahead of recycling capital to repurposing and redevelopment opportunities.
Hammerson chief executive Rita-Rose Gagné told EG earlier this month that the firm is “still working with the partners” on a Croydon masterplan, and “looking at maximising the use and facilitating discussions on future projects with the partners at the moment”. She added that new chief development and asset repositioning officer Harry Badham is focusing on the next steps.
Notably, in its latest market update, Hammerson said a reduction in the valuation of the scheme led to a £58m deficit in its development portfolio in the six months ending June.
Similarly, URW has embarked on a €4bn (£3.4bn) disposal programme in Europe while whittling down its capex, cost base and development pipeline.
But on the face of it, both parties do not appear to be willing to let go of such a massive redevelopment opportunity just yet. Council leader Hamida Ali told councillors at the cabinet meeting that Croydon remains “firmly” in URW’s and Hammerson’s development plans, based on discussions held with their leadership teams in recent months.
Back to the drawing board
“The fundamentals for the original development were sound,” says Chris Geaves, chief executive of Sovereign Centros. “Croydon needed a modern contemporary shopping centre of scale with strong anchors with a regional draw and good connectivity in an area of expanding population. The problem today is that 1.5m sq ft of new space in 250-300 unit shops with two department stores is neither sustainable nor implementable.”
He adds: “I suspect that Croydon’s future will be much more about repositioning and repurposing rather than redevelopment. With hindsight one might look back and argue that this will turn out to be the best solution for Croydon with a refocused approach on its town centre.”
The partnership has outlined aims to start drawing up a new masterplan by the end of the year. According to the council, “preparatory” discussions with the partnership have focused on a mixed-use scheme, with a “lesser quantum” of retail and increased office, education uses, leisure, community, public realm and residential. The first phase would most likely involve the former Allders building.
A bigger mix of alternative uses was also touted for repositioning the Whitgift and Centrale locations, with the council citing lettings to the NHS and the recent opening of trampoline park Flip Out.
Other future plans for the town centre include a textile repairs café in the Whitgift Centre, as well as a “tech office hub” for small and medium-sized businesses.
A public engagement programme on the redevelopment will be backed with £50,000 of funding from the council, with an empty shop in the town centre to be used as a space for activities, exhibitions and roundtables.
However, the council said it would be “several years before the necessary investment and major works are likely to be commenced”.
How events unfolded: key dates
August 2000: Minerva gains consent for 1m sq ft Park Place mall to be developed on the Allders department store site, scheduled for completion in 2011.
January 2005: Westfield and Hammerson work up separate bids to take control of half of Croydon’s Whitgift Centre, in a long-running battle between the pair to take control of the mall.
November 2006: Lend Lease buys 50% stake in the proposed scheme; John Lewis courted to anchor the development.
April 2008: Lend Lease pulls out of the project.
May 2009: Council terminates agreement with Minerva. Park Place project abandoned.
November 2011: Westfield appointed as Whitgift Foundation’s development partner for the centre. The freeholder also owns 25% of the long leasehold.
April 2012: Royal London Asset Management and Irish Bank Resolution Corporation (75% long leasehold owners) name Hammerson as preferred developer.
September 2012: Hammerson buys 25% stake in Whitgift from RLAM.
January 2013: Westfield and Hammerson team up for 50:50 jv, the Croydon Partnership, to redevelop and combine Whitgift and Hammerson’s Centrale mall. Westfield buys 50% stake in Centrale; partnership buys 25% of Whitgift.
February 2014: Croydon Council grants outline planning consent for £1bn mixed-use project. Council begins compulsory purchase order process in following months, affecting at least 360 parties.
April 2016: Plans for the scheme expanded to include 967 homes, IMAX cinema and M&S anchor store. Works to start in 2017.
October 2016: Construction delayed until 2018 on the back of protracted talks with Whitgift occupiers.
January 2018: Mayor approves revisions to the now £1.4bn project.
April 2018: Second outline planning permission officially approved for the expanded scheme.
May 2018: John Lewis Partnership signs as 165,000 sq ft anchor tenant.
June 2018: France’s Unibail-Rodamco completes Westfield takeover.
September 2018: Council decides on CPOs for remaining land to facilitate the project, with the partnership funding all costs.
February 2019: Council announces scheme is under review owing to Brexit and structural changes on the high street. Works postponed until 2020.
July 2019: Former Allders building is possessed by the council. Traders relocate to the Whitgift Centre.
February 2020: Unibail-Rodamco-Westfield removes scheme from development pipeline.
February 2021: Target date passes for partnership to begin works on retail aspect.
April 2021: Outline planning permission expires. JLP confirms it has no plans for new Croydon store.
August 2021: Council prepares new vision for town centre without the mega-mall in a cabinet report.
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