After a brief pause for summer, this year’s shopping centre boom has resumed in earnest. The opening of Highcross in Leicester last week would, in any other year, have marked the UK’s biggest new entrant. But 2008 is also the year of Bristol’s Cabot Circus, Liverpool One and Westfield London – the most significant shopping centre opening in Europe this year.
As with all of the big shopping centre developments this year, Highcross has opened amid a very different retail climate to that of several years ago when the scheme was first conceived. Developers Hammerson and Hermes would no doubt have liked to see the new entrant – which has incorporated the existing Shires centre into its footprint – take its first few steps in an economic climate more auspicious than one with the worst outlook for 20 years.
However, property development is a long-term game and Hammerson managing director David Atkins is in ebullient form. “If you run for the hills every time there’s a downturn you shouldn’t be in shopping centre development,” he says. “With the way that the UK economy works you’re inevitably going to breach a downturn when you develop a centre. Of course it would be preferable if we were opening in better times but, operationally, it’s made very little difference.”
The immediate test will be whether how the centre has been built, let and managed will draw in the shoppers to the impressive raft of stores it has attracted.
For the residents of Leicester, the£350 million that Hammerson and Hermes have invested in the 560,000 sq ft (52,024 sq m) of new retail space at Highcross is a welcome arrival in a city that, until recently, has been starved of retail. For years, shoppers and retailers alike have bypassed the city for the more attractive retail locations such as Nottingham and, more recently, Derby.
The opening day in Leicester was certainly indicative of the locals’ enthusiasm for a fresh retail offer. In the first two hours, 25,000 shoppers flocked to the centre. By 4.30pm this figure had grown to 64,000. Some stores, of course, proved to be more of a draw than others. Apple was among the most notable. It had a queue running into the dozens by 11am and enjoyed a steady flow of shoppers throughout the day. John Lewis sold out of the 33 Wii Fits it had in stock within 15 minutes and it sold a£1,200 TV in the first 45 minutes.
It’s always a sign that a centre has done its job even before the doors open when it brings new retailers to its host city. About 70 per cent of the fashion retailers in the centre are new to Leicester and 19 per cent of all of Highcross’s retailers have relocated to the centre from elsewhere in the city in order to take a larger store. The scheme boasts fashion names Leicester could never previously attract, including Cruise, G-Star, Guess, Zara, Reiss, All Saints and Hugo Boss.
Highcross is without doubt filling a retail void in Leicester. The catchment has always been there – 4.8 million people live within an hour’s drive of the city. What’s more, the retailers have always been interested, but until now lacked the space. Now the facility exists to bring it all together. As Cruise development director Robert Young says: “We had wanted to go into the Midlands for some time and were just waiting for the right location. They’ve really done their homework and I think it’s fantastic for Leicester. It’s raised the whole perception of the city.”
MADE TO MEASURE
As early as the design stage, the brief was to make Highcross sit perfectly with Leicester, so masterplan architect Chapman Taylor had to ensure that every aspect of the process was carefully managed to provide the right synergy. Chapman Taylor director Martin Hunt says: “The key to the design of Highcross is its permeability. The scheme has been designed as a number of city blocks around pedestrianised streets and squares containing a mix of uses, with shops and restaurants at ground floor level, providing an active frontage throughout the site and linking Highcross to other parts of the city.”
Not only has the centre provided the opportunity for retailers to open larger stores, but the refurbishment and linking up to the adjoining Shires shopping centre has removed the cobwebs from a centre that was starting to flag.
Next – Leicester’s proudest retail export – has chosen Highcross as the home of its biggest store in the Midlands, a 50,000 sq ft (4,645 sq m) double floor unit. Before Highcross, it occupied a 7,000 sq ft (650 sq m) store in the existing centre.
Meanwhile, Irish women’s fashion retailer A-Wear has chosen the scheme to kick-start its UK roll-out. The business, which has 25 stores in Ireland, wants to double in size within three years through UK expansion. It has appointed King Sturge to find the right stores across the country, the second of which will be in September’s other new arrival – Bristol’s Cabot Circus.
King Sturge partner Tom Keys-Toyer says: “A-Wear has done a significant amount of research to identify markets where there are large proportions of their key customer. It has to have the right shopping environment and the opportunity to make a real statement – Highcross provides just that.”
Highcross has also brought French cosmetics retailer L’Occitane to the city. The retailer has a target of 45 UK stores within two years and Highcross was high up on its priority list. “It was perfect timing,” says L’Occitane UK property manager Annaclara Giurleo. “When there is a new launch like this one, it attracts a lot of people and publicity, and the other retailers in the centre are perfect for us.”
For Leicester locals, the opening of Highcross signifies much more than just an improved retail scene. Hammerson and Hermes have maintained a close working relationship with Leicester City Council because of the latter’s keen interest in developing a scheme that would help bring its grand vision for the city to fruition.
The council’s plans include a new business quarter with 495,155 sq ft (46,000 sq m) of office space, 3,500 new homes, a science park,£19 million worth of investment to clean up the streets, more pedestrianised areas and a bus corridor to the north of the city.
But, of all this, leader of Leicester City Council Councillor Ross Willmott says the revitalised centre is the main attraction. “There’s no question that this is the biggest part of our regeneration. It’s a vote of confidence that this amount of investment has been put into the city.”
The fact that 90 per cent of the centre was let by the opening day is a major achievement in today’s climate. Grand Arcade in Cambridge, for instance, was only 60 per cent let when it opened in March. At Highcross last week, six stores were still being fitted out and another four were in solicitors’ hands, leaving only six left untouched. In fact, Atkins says Hammerson has had the luxury of being able to turn some retailers away that didn’t suit the mix.
But not everything has been plain sailing for Hammerson of late. While on the surface the site has been a beehive of industrious activity, behind the scenes there have been problems. The figures tell their own story. Hammerson experienced losses of£421 million in the first half of this year, compared with a£367.8 million profit in the same period last year.
To put this in context, the losses are comparable with every other listed developer and skewed by new accounting standards, but reflect the huge challenges facing property companies today. And, of course, consumers are facing tough times too. All in all, Highcross has not opened at the most fortuitous of times.
The other issue is the residential aspect of the development. This is the first time Hammerson has managed apartments in a scheme, and it has taken on all 130 of them by itself. All are empty at present – marketing began on the units last week – but with a significantly weakened housing market, this could prove an additional headache in the near to medium term.
Despite the developer’s optimism, it is unfortunate that after six years in the planning its opening has coincided with an economy that is on the brink of recession. But, as Atkins is keen to stress, that is the nature of property development.
Leicester can be proud of its new arrival. It was badly in need of a modernised retail scene and it signifies a new-found confidence in the city. The brief to bring new space, and new retail, to this overlooked part of the Midlands has been fulfilled. Now all it needs is the shoppers to keep shopping.