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ANALYSIS
Outlets outperform Landsec’s £332.5m deal to buy outlets in Street, Braintree and Castleford from Hermes Investment Management has thrown the outlets sector back into the spotlight.
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he received wisdom has been that the UK is fully supplied – or maybe even oversupplied – with outlet malls and therefore the strong growth seen in the past is unlikely to be repeated. But Landsec has made a major bet that this is not the case, staking its claim as the leading ownermanager of outlets in the UK. The deal was part-funded out of the proceeds of the sale of two city centre leisure schemes – the Cornerhouse in Nottingham and the Printworks in Manchester – and Scott Parsons, managing director retail at Landsec, said: “This acquisition adds three new destinations to our portfolio, where we see potential for growth.” He explained: “Our retail strategy is focused on the destinations that offer the most vibrant and engaging experiences for retailers and consumers alike.” Shortly after the deal new research from retail analysts FSP concluded that, far from reaching maturity, outlets still have room for growth. FSP calculates that the UK has 620,000 sq m of outlet space, or a density of 103 head of population per sq m. By contrast France has 161 people per sq m and Germany 269. But despite having all this choice UK shoppers seem to love outlets, spending €3.48bn in outlet malls in 2016, giving a sales density of €5,613 per sq m which is only exceeded by Germany and Austria. And the UK is home to Europe’s best-performing outlet, Bicester Village. The 22,071-sq m mall generated 2016 sales of €896m, giving a sales density of seven times the UK average. FSP’s managing director Ken Gunn says: “People have been proved wrong many times – some said the UK would only support 10 outlets, and others said outlets couldn’t perform in urban locations.” He believes those who say the UK market is saturated SHOPPING CENTRE JULY 2017
FULL HOUSE AT CHATHAM The Dockside Outlet in Chatham, Kent, is fully occupied for the first time in its 15-year history following a 9,100-sq ft letting to Peacocks. Scheduled to open in July this year, the Peacocks unit is set to house the company’s three brands: Peacocks, Edinburgh Woollen Mill and Ponden Mill – providing increased diversity to the centre’s fashion and homeware offering. Three existing tenants have been relocated in the scheme, and the unit was extended outwards into the service yard to accommodate Peacocks. Major stores at Chatham Dockside include a newly extended 70,000 sq ft anchor store for The Range, plus Marks & Spencer, Clarks, Sports Direct, Clarks and Choice. The scheme
are wrong, too. “The sector is growing at 10 per cent-plus, so we need to revise the view that these are mature assets,” he says. FSP analysis shows that the areas of the UK with the greatest unmet demand for outlet shopping are in the south-east and the Midlands, but Gunn believes new formats are emerging to make new outlets viable in other locations, too. “Where the UK is full is in the mid-to-upper end of the market close to the major conurbations,” he says, “but in some of the smaller places, where the McArthurGlen/Value Retail model doesn’t work, there’s more opportunity.” He points to proposed schemes like Mill Green at Cannock, Eden Westwood in Tiverton and the Scotch Corner Designer Village as ones to watch. The UK’s latest outlet venture is Level 3, Realm’s outlet deck which will turn Princes Quay in Hull into a hybrid scheme with an outlet mall and a full-price centre trading under one roof. And Peel’s Lifestyle Outlets scheme at Glasgow Harbour could be next. FSP’s Gunn expects it to be a success. “They’ll need to convince brands about trading in such close proximity to the city centre but we know that attitudes to this are changing.” Gunn’s conclusion is that there’s still plenty of life left in the UK outlet sector. “Outlets are still very attractive to the UK consumer,” he says. “There’s a lot of potential in a very vibrant sector.”
is served by free parking for 1,450 cars. Centre manager Anthony Sutton says the centre always had loyal shoppers and retailers. “It had its problems but with brands like Clarks, Choice and Mountain Warehouse trading since the beginning tenant retention has been good,” he says. But he says the scheme has been transformed since it was bought by specialist retail asset manager WD two years ago. “WD made the building more efficient, with full LED lighting, and took steps to maximise the natural light in the building,” he says. “The lower the service charge, the happier the tenants are.” The adjoining leisure district is highly complementary with outlet retail, with a new marina, cinema, hotel, and F&B that has bought Chatham Dockyard back to life as a distinct destination for shopping, dining and leisure. The latest addition is a new indoor trampoline park, Flip Out. The Dockside Outlet has consent for a 2,500-sq ft catering unit pod in the scheme's front boulevard. All this helped the scheme attracted 2.25m visitors last year. At last, it seems Dockside’s time has come.
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