The Metrocentre’s Silver Jubilee – shopping centres and online futures

Last week, Gateshead’s Metrocentre marked 25 years since its official opening in 1986.  It was the first of the out-of-town megamalls that opened in the late 80s, followed by Merry Hill in Dudley, West Midlands (1989), and Lakeside (Thurrock) and Meadowhall (Sheffield) in 1990.  Later arrivals included Cribbs Causeway outside Bristol, and Bluewater near Dartford.

These giant developments – typically supported by significant retail park space – were the climax of a busy decade of shopping centre construction.  The out-of-town giants remain highly successful, and an important part of the retail landscape, but they came at the end of a building surge that was halted by the 1992 recession.

Of course, we’re seeing similar patterns today.  With Westfield Stratford opened, there is little under construction at the moment – Trinity in Leeds, smaller schemes in the likes of Newbury.  But not much.  Development is, of course, cyclical, and completion tends to lag against the market.  When the economy picks up again (crosses fingers), we’ll have to wait for a couple of years before developers are able to respond.

But what will they be responding to?  Two news items have caught my eye this morning.  The Daily Mail has a savvy business section, and reports today that “internet purchases of clothing and footwear are up by 21% compared to a year ago, which compares to a 2.1% fall for bricks and mortar outlets”.  The Mail confirms that overall retail sales are now 10% online and rising.

Just to frighten ourselves into the weekend, let’s graph that change over ten years, assuming that the current split in fashion and footwear is 9:1, and that current trends continue unchanged.  (They won’t.  They may accelerate, and they may later slow down.  But I’m seeking to provoke debate and activity, not complete an economics thesis.)


The sharp-eyed will note an increase in total market value of about 27%, but in an economy dealing with 5% inflation, 27% over ten years would be pretty benign.

The other piece I was reading – and this is where we came in – is on the FSP Retail blog.  This reminds us that, as all those 80s shopping centres approach their silver jubilees, all of their original 25-year leases will start – finally – to expire.

A 25 year, upward-only, retail lease.  No wonder Retail Week’s subscribers talk about the UK having “the most anti-tenant commercial lease law in the world”.  Of course, there are very few retailers who would sign a 25 year lease today, but there are plenty who are waiting for old leases to end, freeing them of onerous responsibilities, and allowing them to continue with the strategic reduction in selling space that the online environment necessitates.

This won’t impact the great regional centres that I named above – they’re well managed, regularly refurbished and repurposed, and exceptionally popular.  But all of those infill schemes in secondary towns, with their cheap po-mo detailing, low ceilings, narrow shop units and second-rate parking – they are going to suffer.  Voids (empty shops) will become more prolific, and some centres will close – a good “street” environment is usually preferable (and more flexible), compared to tight and compromised shopping centre space.

Mary Portas’s report on the high street is due to be released soon, and some of the leaked details are looking attractive – eg (as Tim Danaher reports this morning) giving start-up retailers the same business rate relief enjoyed by charity shops.  But Portas has consistently observed that many town centres simply have too much retail space.  The market may cause some developments to be reworked as residential or commercial space, or simply demolished and replaced, but councils up and down the country need to be thinking long, hard and long-term about how to secure their fragile town centres in a smartphone-enabled world.

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