£2.5bn fund closure is bad news for Croydon’s Westfield hopes

News from the City about the financial difficulties of retail investments is likely to hit plans for the Whitgift Centre

The doubts about whether the Westfield redevelopment of Croydon’s Whitgift Centre will ever begin grew even greater this week, as one of the country’s biggest property funds began blocking investors from making withdrawals, blaming both Brexit and the retail downturn for its problems.

The M&G Property Portfolio has several significant investments in shopping centres, and is worth £2.5billion, though it is not thought to have any direct financial interests in the Croydon scheme.

But just as in any financial crisis, when one part of a sector sneezes, the rest catch cold feet.

Westfield – now part of the French-run Unibail-Rodamco-Westfield – has been sniffing around Croydon since 2011, making all sorts of grand promises about delivering a shopping centre to match their existing malls in West London and at Stratford. So far, the only thing Westfield have delivered for Croydon is a development blight.

In a local joint venture with Centrale owners Hammerson, they were supposed to have opened a shiny new supermall by 2017. Having halted their latest plans in February this year, no new date has been made public for when they might start demolition work on the tired and increasingly decrepit Whitgift Centre.

The news this week from the M&G Property Portfolio will not accelerate that process at all.

The fund was suspended after “unusually high and sustained outflows” – demand from investors for their money back – prompted by “Brexit-related political uncertainty and ongoing structural shifts in the UK retail sector”, according to reports in the business press.

Whitgift Centre 2019

The Whitgift Centre is a slowly decaying, less-visited shell of its former glories

Nearly £1billion has been withdrawn by investors from the fund over the last year. M&G admitted it had been unable to sell commercial property fast enough to fund the rush for the door by investors, leaving it with no choice but to block further withdrawals.

Inside Croydon has reported before on the difficulties being encountered by the wider businesses of Westfield and, particularly Hammerson, who as owners of shopping centres such as Brent Cross and Birmingham’s Bull Ring, depend on rents from department stores, and so have been hard-hit by shop closures and retailers folding.

The announcement from the M&G fund is the latest sign of the struggles of the country’s high streets.

Last month, property valuers Knight Frank knocked £76million off the value of the fund’s retail assets, after what Knight Frank described as a marked deterioration in the retail sector since the summer.

It warned of falling rents even in highly sought after locations.

M&G investors may now have to wait months to see their cash again. In the aftermath of the Brexit referendum in 2016, M&G’s fund was shut from July to November, as panicked investors fearing a collapse in values were prevented from withdrawing their cash. Following the EU referendum, and the marginal majority in favour of Brexit, funds worth a total of £35billion were forced to close their doors.

That the state of the Whitgift Centre has not been front and centre in the current General Election campaign is at least in part because both Labour and the Conservatives in Croydon are culpable for allowing Westfield to preside over the decline of the town centre, and undoubtedly because – despite their empty boasts – politicians of every stripe are virtually powerless to implement real change over what has always been a private enterprise.

Westfield were introduced to Croydon nearly eight years ago by the then Tory MP, Gavin Barwell, and Mayor of London, Boris Johnson. But when Labour took control of Croydon Town Hall in 2014, and Sadiq Khan took over as Mayor of London two years later, both embraced the £1.4billion Westfield project with greedy enthusiasm.

There remain political sensitivities, and Tony Newman, the Labour council leader who failed to distance the Town Hall from the Tory-inspired project, carries a large portion of the blame for allowing Westfield to walk roughshod over the borough.

Westfield have now twice been granted planning permission for their scheme, while huge resources have been expended by the local authority on planning public enquiries and preparations to implement a Compulsory Purchase Order, and all to no end.

Dozens of businesses inhabiting the shell of what was once the proud Croydon institution of Allders were also pushed to the brink in the summer when the council sent in bailiffs to close down the building as part of their CPO operation, even though there was no date set for the start of redevelopment work.

And Newman and his sidekick, council planning chief Paul Scott, broke election purdah rules last month when they announced – through the council press office – that they were having “top-level” meetings with the Croydon Partnership over the state of the town centre, just a week before the Fairfield by-election was due to take place.

Of course, there has been no real resolution or information about progress arising from Newman and Scott’s meeting, which was transparently a publicity stunt to favour the unselected Labour candidate in the by-election.

There was some suggestion, though no hard detail, that if the Croydon Partnership does decide to go ahead next year, they will do so with such a significantly altered scheme that they will require a third planning approval from the council. And the council has boxed themselves into such a corner over this that they are almost certain to accede to whatever scheme Westfield and Hammerson come up with.

Tired and confused: Paul Scott

This seems likely to feature much less of a retail offering, but more offices and more residential. “Loads of expensive, ‘luxury executive apartments’, with a few shops and bars tacked on,” was the view of one source familiar with the project.

“What was supposed to be a massive retail project will now be a residential scheme, with only a modest amount of retail space.” A key area to look out for if Westfield do bring forward any revised plans will be the percentage of affordable housing provided by the developers in the revised scheme.

Significantly, Newman continues to block Freedom of Information requests seeking correspondence between our council and the developers, which suggests that the letters of “reassurance” he has been sent by Westfield actually contain little by way of good news for Croydon.

Certainly, much of the bullish bull-shit that has been offered by various council officials and councillors over the near-decade of inertia in the town centre is now being abandoned.

Ahead of the meeting last month, Scott said: “We will be pushing them very hard to make public announcements about where they want to get to and how much time that will take.” Four weeks later, and all that “hard pushing” has delivered not a peep from Westfield.

Even Scott was forced to admit that he and Newman have presided over a long, slow decline of the Whitgift Centre. “Our shopping facilities are looking rather tired there is confusion about what is actually happening,” Scott said.

“Some stores aren’t investing because they don’t know how much time they’ve got.

“It may not be in its heyday but it still attracts shoppers. It is not quite the destination it was and it is not the destination it will be,” Scott said.


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About insidecroydon

News, views and analysis about the people of Croydon, their lives and political times in the diverse and most-populated borough in London. Based in Croydon and edited by Steven Downes. To contact us, please email inside.croydon@btinternet.com
This entry was posted in "Hammersfield", Allders, Business, Centrale, CPO, Croydon Council, Paul Scott, Planning, Tony Newman, Whitgift Centre and tagged , , , , , , , , , , , , , , , , , . Bookmark the permalink.

4 Responses to £2.5bn fund closure is bad news for Croydon’s Westfield hopes

  1. Lewis White says:

    Very sad story. It seems ever more clear that the way forward is for mixed developments with residential , offices and shops–and I really hope– green open space for the new residents to enjoy, and for shoppers and office workers to get some sunshine while walking from office to shop, or bus.

    Once upon a time the Whitgift was open air, and had a big pub in the middle.
    The top deck shops might have been less popular, but was that due to the fact that shoppers needed to climb stairs or use escalators to get up there.

    The 70’s and 80’s seemed to embrace the idea of life under cover — so the place was roofed in.
    To me, life indoors without sunlight and access to the outside is a vision of hell, so I found the roofed-in experience anodyne, and worrying- not just that I didn’t like it, but what about the shop workers who could no longer dash out for a bit of fresh air and sunshine, albeit while maybe having a break for a ciggie. Are people really happier and healthier indoors all day under strip lighting?

    The answer, with a few more decades clocked up, seems that most of us like and all of us benefit from daily sunshine and waliking in the fresh air. It is also backed up by the science-as if we really needed studies to back up what our bodies tell us. But that is the way it seems to have to happen.

    With the redevelopment of the Whitgift, there is a real opportunity to create open air ,sunny, but sheltered open spaces, even if there will be winds generated by the tall blocks.

    Sunshine– sadly, a diminsihing resource as London streets (which are narrow anyway) get more and more hedged about with 4, 5 6 and more storeys lining both sides of the street.

    So, my hope is that the developers and council realise the need for sunshine and open spaces of high quality in the development. Private roof gardens for the residents-swimming pools even– and ground level landscaped spaces for shoppers and office workers.

    That would be good, but will not happen unless the client gets wise, and the council insist on a green development .

    Cafes with outdoor tables along the side of a sunny square, maybe with awnings and windbreaks to allow winter use?. Sounds good to me.

    Liked by 1 person

  2. Perhaps a blessing in disguise. The retail model that worked 10 years ago will not survive the internet age. Croydon already has too many shops that are too similar, no point adding more.

    Perhaps a greater emphasis on commercial leisure facilities will be necessary such as hotels (perhaps a bit more high end and encompassing swimming/spa that could be opened up to the public as well), small cinemas (Everyman Croydon…wouldn’t it be nice), a permanent home for Boxpark (which will make way, eventually, for the Ruskin Square development – land values are too high for that not to happen; it could also use more footfall during quieter hours to make a profit), etc. And yes, a public square or very large courtyard could help open up North End which currently does not feel very open because of the lack of any side streets. Perhaps a new road (which could encompass the square) connecting Landsdown Road and North End.

    I also believe that the whole South End to North End stretch is way too long and offers to many identical shops/restaurants, most of them struggling because of the cheer amount of business (this will be made worse when Westfield or whatever replacement scheme eventually opens). perhaps it is time to split the high street into two so that it is no longer continues (e.g. keep, and improve, one section near South Croydon and another near the town centre. Public realm improvement to the rest of the street (i.e. improve frontages, plant trees, etc…though space is limited I admit).

    Liked by 2 people

  3. lackonicblog says:

    Something a bit like Cheshire oaks would be nice methinks. And it absolutely must be aesthetically pleasing. The other two commenters are bang on the money with what the said

    Liked by 1 person

  4. Lewis White says:

    I went in to the Whitgift the other day or days as I went twice in 3 days, to look for and then 2 days later pick up a couple of rather nice jumpers in my rather large size that the shop (M and S) do not have in stock but the nice assistant ordered for me in “Long” fitting. Next day delivery–beating anything the Internet can offer — and the jumpers fitted fine !

    I also bought 2 shirts from my H and C, my favourite shirt shop, a little way down the mall. Brilliant shirts, and brilliant staff.

    Both visits were 10 out of 10 on a scale of customer satisfaction where 10 is highest ……

    I rounded off my trip with a successful visit to Surrey Street for fresh veg and fruit and fish…and a pint in a landmark pub with a pint of real ale.

    The highlights of the trip which was first by train, and by bus back, were the conversations with the staff, the fresh air and a bit of exercise, and seeing the huge diversty of my fellow Croydon residents and shoppers. Real life, not just sitting at home in front of the laptop, ordering stuff
    “On t’internet”.

    What could have been better?
    I realised how poor the lighting is in central Croydon. It really is inadequate. I don’t think that the street light replacement programme that we have benefited from in Coulsdon and similar areas has
    been rolled out in the centre. Why ?. It needs to be LED modernised, desperately.

    The Whitgift Centre is too big, although the number of empty units was fewer than I expected.
    The footfall seemed OK last weekend, but was much, much lower than in the 1970s and 80’s when it was — together with the department stores, and Surrey Street, “chocka block”.

    The quality of the street environment in the High Street area from Katherine Street to the flyover and beyond past Leon House. The more I see this, and pass through it, the more its greasy boring aspahlt pavements, and shabby , treeless environment gets me down. How ever good the shops are in terms of their own frontages and signage, and interiors, the out doors–the Public realm–is rubbish. Croydn needs to make this a priority– and get their talented Urban design and engineering team in with a decent budget to re-design and repave the main street– South End, and the side streets by the flyover.

    Blue Sky wishes ………….
    I hope that the hundreds, maybe thousands of new flats in central Croydon –like the excellent-looking Leon House office-to-homes conversion, and many others in the process of conversion or construction– all get completed soon, and filled with new residents . Ideally a rich diversity of people who are really happy to live in flats in the city, who want to make their homes in central Croydon, and want to spend time ( and lots of money) in Croydon.

    Like Mr Putin above, I ponder about accessibility, and public realm landscape. Might it be practicable, to get people right in to the middle, to have small San Francisco style old fashioned but new and comfortable trams to run the whole length of the High Street, from Broad Green and West Croydon to South End and the restaurant quarter? Or an electric bus?

    Who ever designed the car access to Centrale must be an “Anti-traffic engineer”. The access is soooo bad. ! It takes a Trump to say it. I aologise not. Like Trump.

    Whilst I am one of those fortunate possessors of a London Freedom Pass, and get free travel on trams, buses and trains, I am also (like tens of thousands of local people) a car driver, and sometimes need to drive into Croydon .

    If we are really serious about getting more people in to shop here, we really need to get far better car access to the car parks.
    In a fairly short time, all new cars will be electric or hydrogen fuelled, so the pollution objection will be much reduced.
    There needs to be a cultural mind set shift in the Council –councillors and planners — to accepting the car– not letting it dominate, but ensuring that central Croydon is “de-disadvantaged” in terms of easy car access , relative to Purley Way, and those Bluewaters, and other out-of-town centres.

    This must be alongside even better public transport into and through the middle of Croydon. That includes arrival display units in ALL town centre bus stops, not just a few.

    .

    Like

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