The latest body-blow to the prospects of the £1.4billion redevelopment of Croydon town centre came last night, with all the force of an Anthony Joshua uppercut: Hammerson is exiting the retail shopping park business, and doing so as fast as it can.
Hammerson is part of the Croydon Partnership, formed with Westfield in 2011 to redevelop the Whitgift and Centrale malls in the town centre.
The scheme has been mired in delays and indecision, causing damaging development blight to Croydon ever since.
In February this year, after two sets of planning applications had been granted approval, a public inquiry and expensive CPO of the area, the prestigious scheme which was originally due to be completed in 2017 was halted for a review by Hammerson (the owners of Centrale) and Westfield (now part of Unibail-Rodamco-Westfield). No new start date has been announced.
This week, the M&G Property Portfolio, a large investment fund which depends on retail for its profits, blocked investors from making withdrawals, blaming Brexit and the retail downturn for its problems, and saying it was struggling to sell off parts of the portfolio because there were no buyers in such a depressed market.
Then yesterday, it was confirmed that Hammerson, too, is trying to divest itself of some of its assets, as the retail downturn has hit its business in the solar plexus.
Centrale is not on Hammerson’s ‘For Sale’ list. But the mall operator is exiting the sector, and quickly
Hammerson has appointed Morgan Stanley, one of its corporate brokers, to sell up to 10 retail parks in a £400million fire sale. The only small snippet of solace for Croydon in this news is that Hammerson’s Centrale is not on their “For Sale” list.
Notably, though, part of Hammerson’s Brent Cross holdings, the Brent South Shopping Park, is on the list. Hammerson has had redevelopment plans for Brent Cross almost as long as they have been pondering their scheme in Croydon.
Hammerson’s out-of-town retail portfolio consists of:
- Abbey Retail Park, Belfast
- Brent South Shopping Park, London
- Central Retail Park, Falkirk
- Cleveland Retail Park, Middlesbrough
- Cyfarthfa Retail Park, Merthyr Tydfil
- Elliott’s Field Shopping Park, Rugby
- Telford Forge Shopping Park
- Parc Tawe Retail Park, Swansea
- Ravenhead Retail Park, St Helens
- The Orchard Centre, Didcot
Hammerson had said in July that it wanted to exit the retail parks sector, to use the proceeds from the sales to pay down its debt.
Following a comprehensive review of the business, the shopping centre owner said it planned to focus solely on two retail segments: its flagship retail destinations and premium outlets.
Hammerson recently concluded the sale of Abbotsinch Retail Park in Paisley. Its £67million sale price was 3 per cent below value. They also sold St Oswald’s Retail Park in Gloucester to the council last month, for £54million, again below the asset’s book value, this time by 8 per cent.
In total, Hammerson has sold £577million-worth of assets in 2019.
Even in 2011, it was foreseeable that the growth in online transactions would make basing the redevelopment of the town centre around large department stores and retail offering was out-dated and on the risky side. Hammerson’s recent conduct of their business does not appear to be that of a shopping mall operator who is about to stick hundreds of millions of pounds into building a new shopping mall.
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So the experts in this field are selling retail developments and Councils like Gloucester and Croydon (Colonnades) are buying them. I wonder who is getting the best deal?
Actually, for the first and probably only time, I side with the council. Sort of.
The Colonnades is not really a shopping centre, more like the not fully developed, aspirant younger brother of one. What is has, though, is a huge amount of valuable land for which planning permission is easily achievable from the owner.
As to Hammersfield in central Croydon I feel a mild trill of unhappy triumphalism. I’ve been saying that it was a dead duck ever since it was first ooted. To see my prophecy come true gives me no real pleasure because of what it means for the future prosperity of what was such a nice, cheerful, appropriately comprehensive town centre.
The best thing for the site now is to to put it up for sale and hope that some charity foundation or other comes along and buys it in order to set up an independent school.
It looks like some of the most determined people to trade from the Whitgift Centre site were the Croydon Village Outlet traders, and it now seems all the more absurd and heartless that they were kicked out.
How times have changed, in only 19 years since the Millenium, with the impact of the Internet on shopping, footfall, and the resulting profitability or otherwise, of shopping centres. Many pension funds have invested in such developments.
Invest in property–it’s safe as houses! But not, it seems, retail property.