Recently in Developers Category

As RECon 2013 draws to a close in the Las Vegas heat, CBRE head of consultancy Jonathan De Mello gives us his final recollections on an eventful few days.

"Tuesday at RECON - what a day!! The conference area was extremely busy as Tuesday was essentially the last day before everyone heads back home on the Wednesday. I was even busier than Monday with a host of meetings both planned and impromptu - really frantic but highly productive networking with lots of great new contacts and some interesting new brands that are keen on entering the UK and wider European market.

Now Americans aren't exactly known for being environmentally friendly, with BIG Oil, BIG cars and the ability to super-size pretty much anything, but the key theme I picked up from RECON this year - from a number of different US retailers - was their desire to build retail 'ecosystems.' 

This generally but not exclusively applies to retailers that also have wholesale and concession 'doors' in addition to free-standing stores and an omni-channel platform, but essentially relates to a desire to make money from a market overall through 'balancing' the ecosystem of all possible outlets, in addition to building brand equity. 

In the digital age this approach is becoming increasingly relevant, as retailers compete to trade in the best locations with high footfall in order to build up the brand which in turn fuels growth for their online business - which generally yields stronger profit margins for them. The ecosystem concept extends this further to incorporate wholesale and concession retail too, which again can in certain markets outperform free-standing stores from a profit margin perspective. 

Channel choice is therefore key, but free-standing stores are essential to this in terms of building up brand equity to drive sales through the other channels, as well as providing an outlet for click and collect services, which generate the highest margin of all given the delivery costs associated with pure online retail. Given the continued importance of free-standing stores - which in themselves will not typically generate stellar margins in very high footfall areas given these locations often have very high rents to match, as an industry I have often thought we should move towards trying to measure the positive impact of a free-standing store on brand equity. 

One way that this could be done is through applying metrics PR firms typically use - such as 'advertising equivalent' to footfall numbers going past a store. This would better aid retailers - and landlords - to understand and quantify the true benefit of having a store beyond just turnover and profit.

Wasn't planning on writing an essay for this blog but it has sort of turned into one - so moving on - it is impossible to write a blog on Vegas and not talk about the evening networking that goes on outside the convention centre. Tuesday night was particularly fruitful for me from that perspective with the NY Developers pool party at the Bellagio, a great dinner at the Mandarin Oriental with some current and new clients, and finally 1 Oak club at the Mirage, where a number of brokers were to be found engaging in a final bout of networking over drinks to wrap up their ICSC in style. It was a fitting end to a great trip to Vegas, and I for one will definitely be back for more next year!"

CBRE's head of retail consultancy, Jonathan De Mello, takes us through the events of an exciting second day at the global shopping centre market conference in Las Vegas.

"It was a real mission to get out of bed at 5am on Monday morning, following the 10-hour flight the day before and consequent heavy jet lag. However, I am glad I did given the hundreds of delegates that were waiting in the conference room for the panel session at 7am when I got into the convention centre! Americans take the adage of work hard/play hard to new extremes, with many of them looking rather the worse for wear after a big night on the Vegas Strip, but still very much there and ready to do business on what must have been only a few hours sleep the next day.

It was great to be part of the panel session with some good questions put to us by the moderator on omni channel, the future of retail, property investment, innovation and other topics. As I was representing European retail, questions on the Eurozone inevitably came up, linked to retailers' current appetite for expansion within and beyond the European marketplace. It is clear listening to the other panellists that retail faces similar challenges around the world, though each country/region has its own particular issues, such as import duties in Brazil discouraging retailers to invest there, or lack of quality infrastructure in India, which presents significant logistical challenges.

Overall though the mood at the session and also during the first day of RECon itself was upbeat. Attendance numbers are well up on previous years and currently tracking ahead of pre-2008 levels. Delegates here, whilst mindful of the lessons learnt post-Lehman, seem to be looking forward to the future with positivity. The key word being used here is 'growth' in contrast to an extent with the UK where business sentiment seems to be a little less upbeat at present. However, it is only a matter of time - given how closely linked the UK and Europe are to the US - before that positivity begins to permeate into UK retail. It's about time too given we are currently in one of the longest downturns in the economic cycle since records began!

The convention centre itself is hugely impressive, with some opulent stands on display. There are three separate areas spread over the 1m sq ft exhibition space - each one of which could comfortably accommodate the entirety of the Mapic 'bunker.' Today was very much about pre-arranged client meetings as given the sheer size of the venue randomly bumping into people you hope to meet simply isn't feasible in the way it is at BCSC, Mapic or any of the European conferences. CBRE alone have brought circa 800 delegates from around the world, which gives you an idea of the scale of the event.  My meetings today were very much back to back, and mainly with retailers - many of which aren't currently present in the UK and Europe but are interested in the market, or have a fledgling presence but want to expand further. Some good new names coming to a retail centre near you soon - watch this space!"

RECon 2013, the global shopping centre market conference, is upon us again. And more than 30,000 industry figures are descending on Las Vegas for the summit this year. CBRE's head of retail consultancy, Jonathan De Mello, has sent his first report from the front line. Expect to hear more from him on this blog over the next four days.

"In a taxi on my way to Gatwick and RECon 2013 and very excited about my first ever trip out to what is the biggest get together of retail and property professionals in the world. I have attended MAPIC every year over the last 10 years, but everything I have heard about RECon is that it - in true American style - is a supersized version of that - on steroids with a huge side order of fries!

Sunday is CBRE's Cabana party at the Wynn pool, which unfortunately I am going to miss as my plane won't get into Vegas in time. The whole idea of networking in your swimming trunks by the pool is quite alien to us Brits, and probably with good reason given the average fitness level of Brits in property is likely to be sub-Vegas poolside standard! However, I am looking forward to the CBRE opening cocktail party at the Encore later - to catch up with a number of clients that are attending the event from around the world as well as CBRE colleagues I haven't seen for some time.

Looking ahead, these opening events are definitely the calm before the storm, with a whirlwind series of back to back winner takes all 30 minute meetings from Monday morning onwards into Wednesday when everyone heads home. Monday morning at 7am is the Global Delegates breakfast, and I am honoured to be part of a panel there representing Europe, with panellists also there from the US, Asia, and Latin America. It should be a good session given the questions that have been circulated in advance on the impact of omni channel and other topics, and I am hoping to provide some insight to delegates on these topics from a European perspective. If you are reading this blog and attending RECon, it would be great to see you there bright and early on Monday morning!

Approaching Gatwick now in record time - thanks to an 'out there' cab driver that sees speed limits more as guidelines than statutory law!"

Today brings the end of a barren spell in the UK retail market that has not been experienced for some time. All eyes are on Yorkshire as Land Securities delivers its mammoth 1,000,000 sq ft Trinity Leeds - some 555 days after Boris Johnson cut the ribbon at Westfield Stratford.

Such a drought in the development pipeline would have surely been unthinkable back in the halcyon days of 2008 - a year which saw Westfield London and Grosvenor's Liverpool One amongst twelve new malls to open in the UK.

The drop down to 'zero' in 2012 can be attributed to an overwhelming litany of factors - economic difficulties for both retailers and developers, a lack of adequate funding, anchor-store pull-outs, 're-evaluation' of planning proposals, refusal of planning proposals, decreasing consumer confidence and the mall-crushing behemoth of on-line retail are only a handful. Essentially, the story is that the fall in new retail development over the past five years is one of the starkest representations of what the global economic crisis has done to this country.

Nonetheless, today should be a celebration of UK retail and its ever-increasing adaptability to difficult circumstances. There have been a lot of noises coming from Land Securities about Trinity Leeds being seen as an 'experience' destination - rather than simply a place to shop. This could ultimately determine the level of the mall's success, as developers increasingly look towards leisure and catering services to help boost footfall and tempt customers away from the convenience of shopping on the internet.

The opening comes at a time when UK retail desperately needs a shot in the arm. Yesterday's budget left the calls to re-think the business rate revaluation delay unanswered, and retailers facing a £175 million additional rates bill in April. This comes off the back of a dismal January which saw three major retail chains falling into administration, causing 10,000 jobs to be put at immediate risk as around 1,000 stores faced the axe.

All that can be put to one side today, as Land Securities can enjoy the fruit of a very long, and at times arduous, labour. Having downed-tools in 2009, you would have got extremely long odds on them opening a 90%-let scheme in March 2013, complete with the first Everyman cinema in the north of the country, in addition to a string of highly-sought-after retailers and catering outlets. It's a huge credit to them, and to Leeds as a whole, that they have done so.

Last month's seminal announcement over Croydon's retail future led me, among many others, to ponder over what the exact specifications of the new joint venture project would be.

I suggested that a new application towards the end of 2013 might take on the guise of Hammerson's "Whitgift Quarter" proposals, spanning across Croydon's two mammoth retail developments, Centrale and Whitgift, rather than separate applications for each scheme.

It appears I was wrong.

Two weeks ago, Croydon Council registered (for the first time) the full application lodged in September by Westfield, after having put forward a scoping opinion a couple of months prior. The applicant is now listed on the (amended) application form as 'Westfield Shoppingtowns Limited & Hammerson UK Properties PLC':

Strangely, the applicant listed on the 'application details' has changed over the weekend from the above to simply 'Westfield Shopping Towns Limited'. What we read into that, I don't know.

All documents within the newly-registered application make occasional reference to Centrale's role in the Croydon facelift, and make almost no mention of Hammerson at all! It's also interesting that the Design & Access statement for 'Westfield Croydon' (!) makes a pointed reference to the successful regeneration of King's Cross as being a precedent for a redevelopment of this scale.

So it appears that Hammerson is happy to "piggy-back" onto Westfield's concept for the Whitgift Centre redevelopment, having already secured consent in May 2012 to part-redevelop Centrale into a distinctly mixed-use mall.

Can we conclude, therefore, that the project will move forward as a double-pronged concept? Will the Westfield-branded shopping mall outlined in the new application come to pass? Can the 170,000 sq ft of leisure space proposed by Westfield coexist with the 99,000 sq ft currently permitted at Centrale?

If the answer to all of these is 'yes', then the exciting announcement made in January may not, in fact, yield an organic regeneration brainwave concocted by two retail heavyweights - but actually simply serve as a catalyst to accelerate two separate projects which could possibly have come to pass independently.

I suppose I would just be a little disappointed that the 'vision' for Croydon might simply turn out to be a staccato amalgamation of separate concepts, as opposed to an inspired 'meeting-of-minds' development spanning over both malls which could truly rubber-stamp the identity of the unique joint venture on the south London town. 

If the development is to be as described herein, then the key piece of cross-party co-operation will come in ensuring the complementary nature of the retail and leisure offer across both redeveloped schemes. 'Hammerfield' must ensure that the newly created "Quarter" evolves as a singular, functional retail core, and not as one entity prospering at the expense of the other.

With the apparent dearth of new retail schemes due to grace the 'completions' list in the near future, it might come as pleasant news to learn that over the past month, EGi's Retail Scheme database welcomed four new major developments comprising a total of over 600,000 sq ft of new retail space. Click the icons on the map below for more details on each (zoom out to see all icons):

Whilst you wouldn't classify these as 'traditional' retail schemes, they are nonetheless indicative of a growing trend in the retail development world - namely, to build new space as part of a mixed-use scheme, rather than restricting projects to A1 use. Indeed, we are now even seeing owners of high-profile malls look to alternative uses to help fill vacant space and increase customer numbers (in addition to dwell time). 

Of particular interest is the proposal just north of Dunstable, known in the official council document as the "strategic urban extension of Houghton Regis" It reminds me of a similar proposal I blogged about in November 2011 - an entirely new town on the Hoo Peninsula, to be known as Lodge Hill. 

That particular scheme is still without outline approval after 15 months, so with that in mind I'll hold off on predictions as to when all this retail space will complete. It's encouraging, however, to know that despite all the well-documented struggles facing the retail market, there remains the ambition of developers and councils to keep faith with large-scale retail schemes - even if, going forward, retail space has to settle for being a constituent part of a mixed-use project, rather than the headline act of a single-use mall.

In a climate where shop vacancy levels are continually on the increase, it may come as a pleasant surprise to hear that demand for prime billboard space in busy retail destinations remains high. Large-format outdoor advertising sites can generate important new and incremental revenue streams for retailers, landlords and managing agents, explains blowUp Media Group Managing Director, Katrin Robertson.

For advertisers, getting their brands noticed at the point-of-sale when people are in a buying mode is of paramount importance for influencing buyer behaviour. Therefore non-traditional outdoor advertising sites in and around shopping malls and bustling High Street locations are highly sought after.

For retail landlords, giant banners, building wraps and even digital screens, can also offer a great way to secure vacant premises, contain and fund restoration work, beautify city centres and generally leverage advertising revenue from existing properties on a short term or ongoing basis.

Banners can help to disguise vacant properties and keep an area looking bright and vibrant rather than appearing empty or run down. This helps to keep rent prices buoyant in the area and can form an important bridging gap when properties are not leased.

Building wraps also offer excellent protection during shop renovations, concealing unsightly building work and keeping the high street looking clean and tidy.

On a practical level building wraps can encase scaffolding and protect passers-by from the mess and noise of building work. The light weight mesh materials of the wrap also allows light to permeate the property beneath.

Building wraps can mimic the original façade and showcase what the property will look like once renovations are complete. Printed façades can be important for historic buildings requiring long term repair work. Ad revenue can help to fund conservation projects and contribute towards city beautification, as was the case during restoration work carried out to the historic Tower of London.

For retailers, banners can provide powerful brand building opportunities that ensure their premises stand out from the crowd. During the Games, a hot bed for gigantic banners and eye catching building wraps, John Lewis wrapped several key stores across the UK to highlight its role as the Official Department Store Provider to the London 2012 Olympic and Paralympic Games. Their flagship store wrap (right) consisted of a 4,000 square foot Union Flag, highly visible along Oxford Street at a time when visitors to London swelled to over 10 million.

Outdoor advertising sites can provide long term opportunities for landlords in areas with significant footfall and proximity to retail destinations. More advertisers are embracing digital signage as a way of bringing their brand stories to life using full motion video.  Digital delivers cut through and brings new flexibility to Out of Home, and has the additional benefit of being remotely update-able at the click of a button. Digital signage also enables multiple advertising campaigns to run consecutively with the potential to earn higher ad revenues.

When looking for an outdoor specialist to partner with, property specialists should look for a one stop shop to help realise their project from conception through to delivery.  Generally speaking, Giant Posters need approval from the authorities, so selecting a company with both an in depth understanding of planning permissions and excellent relationships with local authorities is a must. Operational experience, safety track records and sales acumen are all integral to ensuring your site looks good and is constantly earning ad revenue.

Well executed banners can lift an area by creating clean, bright, modern looking spaces. Great advertising campaigns are also well received, fun and create 'talk-ability' amongst the public. Done well, outdoor advertising can generate significant returns for landlords looking to leverage their portfolios.

BlowUP media specialise in large-scale outdoor advertising, and currently manage over 300 locations - the largest such network in Europe.

http://www.blowup-media.co.uk/

September 27^th marked the six-month anniversary of the implementation of the government's new planning policy framework; designed ostensibly to simplify the planning system, protect the environment and, perhaps most crucially, to promote sustainable development.

With an entire section within the guidelines devoted to 'Ensuring the Vitality of Town Centres', the framework was also designed (albeit less pointedly) to stymie the proliferation of major out-of-town retail schemes, and lend another government hand to the long wished-for recovery of Britain's urban centres.

The full impact of the new framework won't be fully realised for some time; however, six months on, we can perhaps begin to assimilate an understanding of how the new guidelines are shaping retail planning (if at all) - and in particular the impact so far on out-of-town developments.

The criteria for inclusion in the following study were that the applications either have to be for new out-of-town retail developments measuring over 50,000 sq ft with three units or more, or for extensions to existing developments of that nature.

The charts below show the number of applications submitted between April 15^th and July 15^th over the last three years, and the combined sizes of all proposals:

What these charts signify is that although the number of applications has reduced compared to last year, the total amount of space has hardly dropped off at all - there are still several major applications for out-of-town space being lodged even with the new framework in mind. 2010 saw a similar overall number of applications to 2012, but for only around 60% of the amount of space applied for this year.

The pie charts below indicate the status of these proposals as of September 27^th in each respective year:

In the two years preceding the NPPF, 50% or more of the applications submitted between April 15^th and July 15^th had been approved by September 27^th. In 2012, only 33% of applications (5) had been given the thumbs-up by that date. This is in addition to one of the proposals having already been refused - which did not happen in 2011 or 2010. Whilst we can't assess the exact role of the NPPF in every individual application; it seems fair to say that the new guidelines are having an impact when it comes to the final outcomes of out-of-town proposals.

This theory is backed up by the chart below, which indicates the average time taken (within the 15^th April - 27^th September parameter) for the applications to be decided:

2012's average is a significant increase on those of 2010 and 2011, and may go some way to explaining the higher proportion of applications without decisions. As authorities adjust to operating the mechanics of decision making within the guidelines of the new proposals, delays to decisions are to be expected. This might also be due to different interpretations of the nuances of the planning framework causing developers to further explain why their proposal constitutes a 'sustainable development', and for objectors to counter that with reasons to explain why it doesn't.

Moving forwards, I will be interested to keep an eye on the undecided applications thus far from 2012 - as they represent 77% of the total space applied for. Of the undecided applications from 2010, 50% of the space was eventually permitted, whilst the 2011 figure is 29% (40% still without an outcome).

In twelve months' time, it will be of interest to see what proportion of the as-yet-undecided space has got the go-ahead, the percentage refused permission, and also how much has been either withdrawn or even superseded. I'll also be curious to see the number and scale of out of town proposals lodged during a full eighteen months of NPPF implementation.

I said at the outset that the full impact of the new planning framework is still to be realised - but there are certainly some visible trends so far that it is having an impact upon decision making, even if from a spatial point of view it hasn't quite dampened developers' tendencies to look beyond the urban perimeter for expansion opportunities. This may come further down the line, however, when the NPPF regulations mean a higher proportion of out-of-town applications are either turned down or left unresolved for an unpalatable length of time.

(All Sources: EGi Planning)

Regular readers of our retail blog will recall an earlier entry on the brewing row between owners and tenants of the Burlington Arcade on Piccadilly, W1, over plans to breath new life into the building.

Meyer Bergman, the European real estate firm that bought the Grade II-listed arcade in October 2010, has now revealed the first pictures of proposed new restoration works following the receipt of Planning and Listed Building Consent.

Work has now started and the first phase, which will focus on restoring the upper elements of the arcade, is expected to be complete by the end of April. It involves the installation of up-lighting and the re-painting of the painted elements in the original ecru white colour used in 1819 when the arcade first opened. 

Work is being undertaken out of trading hours to allow shopkeepers to remain open for business throughout the process.

Markus Meijer, chief executive of Meyer Bergman, Burlington Arcade's co-owner, said: "We expect these works to be complete in time for the Queen's Diamond Jubilee celebrations and I am particularly excited that, once complete, we will have a view not seen for over 100 years and possibly not since Queen Victoria celebrated her Diamond Jubilee in 1897."

Poor Croydon. The town centre is crying out for a cohesive, coherent retail-led regeneration strategy but, judging by this week's events, I suspect it will be some time before a happy conclusion is reached.

Westfield's jubilation on Thursday that it is to act as a development partner to the Whitgift Foundation, which owns the freehold and a 25% long leasehold stake in the town's Whitgift shopping centre, was short lived. 

The brewing row between the owners and tenants of the Burlington Arcade on Piccadilly, W1, has a distinct sense of déjà vu about it.

More than 34,000 people backed a petition in January 2010 calling for action after 150 traders were ejected from Portobello Market, W11, in favour of an All Saints store.

They argued that the changes to Lipka's Arcade, undertaken by landlord Warren Todd, threatened the character of one of the capital's top tourist attractions and accused him of jeopardising the market in pursuit of high rents.

Fast forward more than a year and a half, and the same argument is now being thrashed out under the arches of the Grade II-listed arcade in Piccadilly.

Meyer Bergman and Thor Equities, the owners of the Burlington Arcade, are threatening to replace boutique retailers, some of whom have traded there for more than 50 years, with glitzy brands such as Jimmy Choo. They have also hired New York-based retail guru Peter Marino, famed for his black leather cap and sunglasses combo, to head up a reported £2.5m makeover of the arcade.

Daniel Bexfield, who has run a silver shop in the Burlington Arcade for 13 years, has branded the joint venture's plans for the arcade as "Dubai style" and Susanna Lovis, a specialist in Victorian and Edwardian jewellery, warns that it risks being turned into another Westfield mall.

As the mood at the arcade becomes increasingly sour and Bexfield's protest gathers momentum - film director Michael Winner recently waded in - it's hard to see an easy and peaceful solution to this familiar dispute.