Will out of town regional shopping centres get off the ground this year?
Most of you will probably be shouting "not a chance" at your screens but Investec's Real Estate note this morning had a few interesting thoughts as to why they might.
Yes Portas, government and local authorities are all gunning to protect the high street which will limit development of both out of town or edge of town shopping centre but, it says, "with planning authorities under revenue pressures themselves they may be more relaxed about granting out of town retail permissions than at any time in the recent past."
Whether they really will or not is a different matter. It's one that largely depends on who ultimately wins, the Portas protect the high street versus the convert the high street to other uses argument.
Development is thin on the ground and, beyond Land Securities in Leeds, the note points out that there's a dearth of major UK shopping centre development. The assumption is - and it's a pretty safe one - that there won't be any more spec development announced any time soon and you just need to look at the major retail developers to see why.
Investec say Hammerson has adopted a very clear, but very risk adverse strategy. It expects them to be acquisitive rather than spec building. We've written before about its progress - or perceived lack of it - on Leeds and Sheffield. Whether it will get any further with the Whitgift centre in Croydon is also up in the air at the moment.
The other big retail developer is Land Securities.
Investec says that its two recent developments New Change and Cardiff were badly timed but, that said, its Leeds and Glasgow retail schemes are working.
It has put a sell recommendation on Capital Shopping Centres, because of its exposure to rental falls saying that despite trading at a near 20% discount this does not compensate for likely declines in its NAV.
Overall its sentiment is bearish, Investec are expecting rents to fall and it does point to the fact that Jones Lang LaSalle estimate that 50% of shopping centre leases expire within the next four years. Ouch.
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