A year after the opening of Westfield London the developer is building an even bigger scheme across the capital. Tim Danaher pays a visit.

Come out of Stratford station and it’s hard to imagine how, in less than three years’ time, the eyes of the world will be on this currently dismal corner of east London. Turn and look behind you, to the other side of the tracks, and it all makes sense.

Three years ahead of the 2012 Olympics, the Stratford site is a hive of activity and a whole new district of the capital is rapidly taking shape. But while the stadium and the distinctive aquatic centre next door dominate the skyline, it’s not all about the Games. Europe’s largest urban retail development by Australian developer Westfield will be at the heart of the new town being created in E15.

And while its second scheme is gathering pace, at the other end of the Central Line, Westfield London is a year old this week. So it was timely for Retail Week to get an exclusive preview of the Stratford site, and to talk with Westfield UK managing director Michael Gutman about how the existing scheme has fared and what the new one will be like.

Walking round the Stratford site, one key difference between the schemes becomes apparent: there is going to be no repeat of the frantic last-minute rush that was required to get Westfield London ready in time. Completion isn’t due until 2011 but the structure of the Stratford scheme is largely in place. The developer is already cladding the Marks & Spencer anchor store and glazing over the main atrium.

At 1.7 million sq ft, Westfield London is a big scheme. But Westfield Stratford City, as it will be known, will be even bigger, totalling 1.9 million sq ft. The tone of the schemes will be different too, reflecting Stratford’s less affluent surroundings. There will be no luxury village as at White City, but what there will be is a John Lewis, the department store chain having passed up the opportunity to open a store at the original scheme.

“There are more people on the east side of town,” says Gutman. “They have slightly less spend in their pockets but there is significantly less competition.” He is encouraged that for shoppers in Essex and Hertfordshire, and even further afield like Suffolk, there are few retail options beyond Lakeside.

Hard to miss

A big selling point of the Stratford site is its location at the heart of the Olympics site. As Westfield Stratford City director John Burton says: “It’ll be very difficult to come to the Olympics without coming through Westfield.” That’s because the scheme sits directly in between the existing Stratford station – which is served by two Tube lines, the Docklands Light Railway, the London Overground and main line trains – and the stadium itself, which in turn also has the new international station, to be used by Euro­star and domestic high-speed trains.

The scheme itself is in the shape of an ellipse, with one side under cover, housing the mainstream shopping centre element. Anchored by Marks & Spencer at one end and John Lewis and Waitrose at the other, there will be three levels of retail, with a service and convenience-based offer at the bottom and more mainstream retail above, with double-height frontages on the top level.

The other side of the ellipse takes the form of an outdoor street, targeting what Gutman calls “Covent Garden-type” retailers that prefer to open onto the outdoors. Food and catering will also form a big part of the offer, and the scheme is bisected in the middle by a walkway leading straight into the Olympic Park.

With the anchors in place, the focus for lettings on the rest of the scheme is switching to what the property world calls the MSUs – Major Space Users. While letting Westfield London was no walk in the park, the market has worsened significantly since and getting retailers to commit has proved even harder for schemes opening this year. Retailers are also driving harder bargains; Sir Philip Green for one is rumoured to have demanded the same terms as John Lewis to come into the scheme.

Gutman is at least outwardly relaxed. “We’ve got very good interest,” he says. “The retailers are trading very well at Westfield London, and the market likes this development in terms of the critical mass it will have. Retailers see the merits of being in major schemes.”

Burton adds that the Olympics will give retailers a hard-to-resist opportunity to showcase their brands to an extraordinary global audience. “They’re getting the idea that they could show their best stores to an audience they could only dream of,” he says.

Certainly the trading experience for most retailers of Westfield London has been positive. It has attracted 23 million visits, 15% ahead of expectations, and most larger multiples there seem more than happy with store performance.

There have been exceptions. Some of the smaller international fashion brands that made their debuts in the scheme have struggled to stand out, while Marks & Spencer’s food hall, hidden in the basement, has laboured. But overall the performance has been strong and the centre has become a destination, with more than a third of shoppers coming from beyond the intended catchment area between the West End and M25.

Even the luxury Village area has performed well, at least for the best known brands within it. Louis Vuitton senior vice-president Philippe Schaus says its store has “surpassed all expectations”. Even more surprisingly the scheme overall seems to have done the West End little harm, helped by the cheap pound attracting tourists to the capital.

The results have been good but retailers’ relationship with the developer has not always been harmonious. Westfield’s brash and characteristically Antipodean approach came as a culture shock to retailers more used to the traditionally clubby way in which UK developers have generally operated, particularly around the issues of the service charge and Westfield’s involvement in store design.

Gutman is unapologetic and says that if bricks and mortar retail is to compete successfully against the internet, a rigorous approach to store design is essential. “It was a challenging process for the retailers but we wanted to deliver a sea change in terms of presentation, and I think we both got the best out of it. We’re competing against online, and trying to create an experience is going to be the future of retail.”

On service charges, Gutman says the controversy at Westfield London was a result of the actual costs of the centre coming in higher than original estimates. For Stratford – where it has the advantage of developing its own scheme from scratch rather than amending one created by another developer at Westfield London – it is promising a service charge of £13.99 a sq ft, which it says is in line with the market.

It’s been a tumultuous first year but Westfield London has firmly established itself as part of London’s retail scene and somewhere good retailers do well. With two years to go, and the Olympics alongside it, all the signs are that Stratford could have even more of an impact.

Westfield Stratford City in Numbers

1.9m sq ft

Making it Europe’s largest urban shopping centre

300

Retail and food outlets

4 million

People within 45 minutes’ drive time

5,000

Parking spaces

£13.99

Planned service charge per sq ft