Croydon’s council, the Mayor of London, the borough’s MPs, residents and shoppers have all been kept waiting for progress on the town centre redevelopment because of a multi-billion-pound boardroom negotiation, according to the Paris businessman behind the deal, as our retail correspondent, M.T. WALLETTE, reports
John Lewis may, today, be acclaimed for finally coming on board and saving the Westfield redevelopment of Croydon’s Whitgift Centre. Yet there is an irony in the fact that, by the time the £1.4billion megamall that was first proposed by Westfield in 2012 finally opens for business, John Lewis and their Waitrose supermarket will find themselves trading in a centre that is run from Paris, and not from Sydney, and which may not even have “Westfield” in its title.
It has emerged that the timing of today’s announcement was delayed to await boardroom manoeuvres which secured the £18billion takeover of the Aussie hard-bargainers Westfield by the French mall operator Unibail Rodamco.
And it seems that the greatest drag on the slow progress of the Croydon scheme has been a three-year negotiation by Westfield’s owners, the Lowy family, as they sought a takeover so that they could exit the business.
Bringing John Lewis to Croydon town centre has been the Holy Grail for commercial property developers for more than two decades. Back in the 1990s, Minerva held up the idea of a John Lewis store to win over support for their St George’s Walk redevelopment that never happened.
John Lewis stores had been key elements in the Westfield malls developed at Shepherds Bush and Stratford (though both are significantly larger than what is proposed in Croydon), so it was unsurprising that the “never knowingly undersold” slogan was hinted at from the very first when Westfield arrived on the scene in Croydon.
With John Lewis this week announcing that they have agreed to extend their lease at Brent Cross – run by Hammerson, the owners of Centrale and “partners” in the Croydon redevelopment – the expectations for Croydon were rising. But it was not until last week, when Westfield shareholders voted to accept the Unibail Rodamco takeover, that anything could be put into the public domain.
Westfield were coming under increasing pressure to make a move over the Croydon scheme, where they have already spent more than £30million on preparatory work. Sources suggest that figure might even be closer to £40million.
Now, most of the key decisions will begin to be overseen by Unibail’s executives.
Unibail Rodamco is the largest property company in Europe, with shopping centres in France, Spain and Poland. The company’s Les Quatre Temps centre in Paris is the highest-grossing shopping mall in Europe.
Before the takeover deal went through, Unibail was worth around £37billion. After the Westfield takeover, the business is valued at £54billion.
At a time when high street retail around the world appears to be dying on its arse, that has the appearance of a very good escape deal for Frank Lowy and his family, who founded Westfield in 1953, and a curious investment for the French.
Yet Christophe Cuvillier, Unibail’s CEO since 2013, disagrees.
In interviews with the trade press and the Torygraph earlier this month to talk up the deal, Cuvillier revealed that the negotiations with Westfield had been going on since 2015. At the start of May, his board gave the green-light to the Westfield takeover. “We thought it would be great to combine the portfolios, and the moment is right now for Westfield,” Cuvillier said.
Unibail’s strategy has been to sell off smaller, less profitable shopping malls, and to concentrate on bigger, ballsier centres where going to the shops has become more of an event, rather than a necessary chore.
Taking over Westfield has also given his company an important foothold in Britain, and America.
He said: “If you visit New York, San Diego, retail is not dying. Boring retail is dying.” House of Fraser and Marks and Sparks, take note.
“We believe in physical retail and shopping destinations, in flagship stores. We think retail is growing in three main directions – on the internet, in convenience, and in the big destination experiences, and that’s what we’ve chosen to develop.
“Our job is to concentrate on the best shopping centres in the best areas,” Cuvillier said.
Unibail’s strategy has tended to depend less on what its retail tenants do, and more in creating the atmosphere around them that draws in the precious customers – more spaces in the centres for performers and free-to-view events. Only the best brands get in, and demand for space is high.
Thus, whatever the realities about the “new concepts” promised around the relatively small John Lewis store secured for Croydon (what has been announced today is barely one-third the size of the old Allders department store; Croydon’s John Lewis will be smaller than the John Lewis stores at the Westfield supermalls in Stratford and at White City), it will be the activities around the centre which will distinguish the offer from bargains bought on the interweb.
“It is very difficult for internet retailers to make money,” Cuvillier told the Torygraph. “You’re not going to make anything because you will always have someone who will sell it cheaper.”
Unlike Lowy and much of the Westfield team, Cuvillier does not come from a property development background, but from retail. That’s chic, French retail, having worked at premium brands such as L’Oreal and working in Lâncome’s UK division.
“Ten years ago I’d have told you that luxury brands in shopping centres in London wouldn’t work because of Bond Street. The question is not about knowing what’s going to happen in 10 years or 20 years, but being ready to change.”
Croydon’s £1.4billion scheme is one-tenth of the global developments which the combined Unibail-Westfield portfolio has in the pipeline. And the project will undoubtedly come in for some close scrutiny from Cuvillier and his colleagues.
“We review our development projects at least three times a year. We’re building things that need to last for 20 or 25 years,” he said.
Given the length of time it has taken to deliver the Croydon project, that is probably just as well.
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