There’s no prospect any time soon of French-based developers ending the decade-long blight to the Whitgift Centre, according to the CEO of Unibail-Rodamco-Westfield. By our retailing correspondent, MT WALLETTE
Covid was “the final nail in the coffin” for the £1.4billion plans to build a vast Westfield in central Croydon, according to an interview with the boss of the Paris-based company which owns the shopping mall developers.
According to the interview with Jean-Marie Tritant, the chief executive of property giant Unibail-Rodamco-Westfield, in today’s Sunday Times, “I think we went too far,” even with another project in London that was less than one-third the scale originally proposed for Croydon.
The Tritant feature suggests that URW is in deep financial difficulties, and it outlines the abandonment of the mega-mall model which once saw Westfield build their temples to retailing at Stratford and Shepherd’s Bush.
In the article, Tritant insists URW is still committed to developing Croydon – though Inside Croydon’s loyal reader will have heard all that many times before. “But whatever emerges is likely to more closely resemble Les Ateliers Gaîté than Westfield London,” the Sunday Times says.
Les Ateliers Gaîté is the recently completed development in Montparnasse, Paris. It includes a 32-storey hotel, 60 shops, co-working offices and 62 modular flats. Built for £430million, it is modelled on the idea of the “15-minute city”, with people living on and around the mixed-use site.
According to the Sunday Times, “The scheme is unrecognisable from the two giant shopping centres that URW owns in London.”
Tritant says, “If we were to redo Westfield London or Westfield Stratford today, we would integrate mixed uses even more. More of our new projects will be delivered with this vision.” Think Boozepark, but with hundreds of flats over the shop.
URW removed Croydon from their “pipeline” of developments in February 2020 – before any impact of covid could ever possibly have been evaluated. Today, their “asset portfolio” proudly displayed on the Paris-based company’s website lists 109 different locations – hotels, offices and shopping centres – including Westfield Stratford and Westfield London at Shepherd’s Bush. The list includes a number of assets that are listed as “in development”.
Croydon does not appear on URW’s asset portfolio page at all.
Truth is, URW’s “re-evaluation” of the Croydon project has been going on since at least March 2019.
It was Tory-inspired Brexit that did for Croydon’s Westfield centre.
The then CEO of URW said as much in a letter to Tony Newman, Croydon’s council leader, nearly four years ago.
Newman, Jo Negrini, the council chief exec and the council’s lawyers spent nine months trying to block the publication of that letter, only releasing it to Inside Croydon after they were ordered to do so by the Information Commissioner.
In the letter, dated March 20, 2019, Christoph Cuvillier, Tritant’s predecessor as URW boss, stated, quite baldly: “There remain, however, significant challenges as regards the UK economy and the political outlook in the near future.
“This is compounded by the deep structural changes currently facing retailers… in addition to Continental European retailers suspending plans to expand into the UK because of uncertainty linked to Brexit.”
A year later, before the effects of the pandemic could be known, in the last detailed statement issued by the Croydon Partnership (the joint venture formed in 2012 by what was once plain old Westfield and Centrale’s owners, Hammerson), they were already talking about “a vibrant, mixed-use development”.
“We are reviewing the development to ensure it meets the future needs of the community, including a viable mix of retail, dining, leisure and uses such as a hotel, offices and residential space.” So nothing much has changed in the platitudes being offered for two and a half years.
As Gavin Barwell, the former MP who brought Westfield into Croydon in the first place, noted at the time of that statement, it represented “a significant scaling back of ambition”.
And that scaling back seems likely to continue for some time yet, as URW has to untangle itself from the debt it had built up in the two decades before covid.
While URW’s existing two London centres have been ranked as among the best in Europe, even these supermalls have lost 43per cent of their value since 2018.
Ahhh… 2018. What should have been the first full year of trading for Westfield Croydon, had all the expansive (and expensive) plans first revealed 10 years ago ever come to pass. That was the year, instead, when Westfield opened its £600million extension to Westfield London, in Shepherd’s Bush.
Today, that shopping centre’s House of Fraser and Debenhams stores, once the mainstays of any half-decent mall, stand empty. It hardly augurs well for any hoped-for redevelopment of Croydon’s tired old shopping district that Tritant admits that even the Shepherd’s Bush expansion was a mistake.
“I think we went too far,” Tritant told the newspaper.
“The mistake is maybe not the size but the way we thought about it. We should have been thinking more of mixed-use.
“When you talk about entertainment in a mall today, it’s mainly cinemas. So you need to bring other uses like eSports, gaming, virtual reality, immersive experiences… like virtual visits to the Pyramids.”
There’s work going on on the ground level of the old Allder’s building in Croydon for a virtual reality “immersive” experience, though even that appears to be running behind schedule.
With Tritant’s company having to balance the demands of its debt burden, with interest rates rising, adjustments to URW’s existing assets, to keep them viable and operating, are likely to be prioritised over building anything new, such as in Croydon. That former House of Fraser store in Shepherd’s Bush will be turned into a co-working space with a roof-top restaurant and a health club, Debenhams is to be filled with entertainment outlets, and across the city, at Stratford, the retailing giants are planning to become residential developers, with flats or student accommodation.
The equation for Tritant and URW is all there in the numbers: URW owns 80 shopping centres and 30 offices in 12 countries. These properties have a net value of €22.8billion. But URW’s stockmarket valuation is just €6.5billion, not even one-third the value of its assets. For a property company, this is a problem.
And then there’s another problem. URW has €23.3billion of debt.
It was this imbalance on the corporation’s balance sheet which led to a boardroom battle two years ago, which became another factor in the development paralysis that has blighted Croydon’s town centre so badly for more than a decade now. Cuvillier was ousted as CEO, Léon Bressler took over as chairman and he appointed Tritant to chief executive, with a brief to flog off the company’s American assets.
Even that plan stalled, in the face of the gale-force business headwinds from covid. No one wants to pay top dollar for a shopping mall in the middle of a pandemic.
And so it appears that Croydon will remain in an impasse for some time yet.
Of course, Tritant talks up his business’ prospects. But he cannot reverse history, and he cannot return to the retailing glory days before online shopping took such a hold.
“Covid was the biggest stress test in the world,” he says.
“You saw online sales going through the roof, so Amazon opened more warehouses and hired more people. But what happened when we had the right to reopen? People came back. Now online sales are exactly where they would have been without covid.”
The newspaper report says that the business mogul was dismayed when he saw shoppers, post-lockdown, queuing outside stores to return items they had bought online.
“But after speaking with retailers, I realised it was a great thing because it showed these stores were key.” You can almost hear Eric Idle singing the opening lines of “Always look on the bright side of life…”
Fewer, bigger stores in flagship destinations is now the mantra.
Despite a recovery in rent collection and footfall since the pandemic, URW’s shares are stuck around the level they were in 2020. Its debt is fully hedged for the next five years, but URW still needs to refinance about one-fifth of its borrowings within the next two to three years. The newspaper report quotes a City analyst as saying Tritant “has been dealt a difficult hand: the cost of money has gone up and the value of the assets is going down”.
There remain doubts in the markets about whether URW will be able to sell its 24 American shopping centres even at book value.
“There will be tough times ahead… but I am not overly pessimistic,” said Tritant. A visit to the site of his company’s unbuilt Croydon megamall would probably alter that cheery disposition.
Read more: After wasted decade, Mayoral candidates need town centre plan
Read more: Westfield letter that Tony Newman didn’t want you to see
Read more: Wait-field: now Labour council leader Newman calls it a ‘mess’
Read more: Scaled-down town centre development could take 10 years
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