While new retail space is being created at the lowest rate since the 1960s in the rest of the country, Leeds is bucking the trend
Building shopping centres is fraught with difficulties. Just ask the people of Bradford. Their city centre is blighted by a large building site, dubbed the Bradford Hole, where work on a new Westfield shopping centre was halted four years ago. Occupy Westfield protesters recently set up camp there for five weeks but have left again.
In nearby Leeds, however, it’s a different story. A new shopping centre the size of 13 football pitches and crowned by a sweeping glass dome is due to open there next year, the largest project of its kind in western Europe. Trinity Leeds will have a million square feet of space with 120 shops, 12 restaurants, bars and cafes and the biggest Everyman cinema in Britain. As if that were not enough, work is due to start on another huge city-centre mall in 2014.
The company behind the £350m Trinity Leeds project, Land Securities – Britain’s largest property developer – has taken a big gamble. It already owns the White Rose mall outside Leeds, which is its most valuable retail asset. But despite the recession, the company reckons Leeds is hungry for new shops.
Trinity Leeds, named after the nearby 18th century Holy Trinity Church, could easily have fallen victim to the financial crisis. But after being put on ice for 15 months it is now due to open in March.
“We weren’t going to leave a big sandpit in the city centre,” said Gerald Jennings, Land Securities’ portfolio director for the north and Scotland. He describes the project as a game changer for the city, which will have a ripple effect on other businesses. “We’re the first to commit to a large-scale scheme in Leeds and we’ve been here for a long time. City centre schemes are tough to put together. You’ve got to buy up a lot of interest. There are only a few people who can do this. You do need that financial strength behind you.”
Back in Bradford, Westfield insists its mall is back on track with a revised, slightly smaller scheme. The Australian developer recently signed up Marks & Spencer and Next as anchor tenants in addition to Debenhams, but will not restart construction until it has pre-let more space to other retailers.
Despite the problems in Bradford, Hammerson – one of Land Securities’ biggest rivals – also believes it has the financial strength to make a new scheme work in Leeds. The company, which owns shopping centres around the country including Brent Cross in London and the Bullring in Birmingham, hopes to start construction of a £120m, 400,000 sq ft mall called Eastgate Quarters in 2014. It originally envisaged a £650m mall of the same size as Trinity Leeds, and the size of a second project phase will depend on market conditions.
Its two shopping streets will be modelled on the nearby Victoria Arcade, home to luxury retailers including Harvey Nichols and Louis Vuitton. Leeds is renowned for its old shopping areas, with the city’s Cross Arcade providing a home for Michael Marks’s famous penny bazaar when it moved from the outdoor market in 1894. Hammerson is now trying to buy Victoria Arcade to gain a “front door” for its project, which was put on hold in late 2008. Rents look promising. Earlier this year L’Occitane paid £270 a square foot – a rate not seen in Leeds since 2007.
In another important step, Hammerson recently secured John Lewis as an anchor tenant for Eastgate Quarters and is close to agreeing a pre-let. Land Securities had been talking to the department store as well, and was disappointed not to be able to accommodate it at Trinity Leeds.
Both companies, however, believe their malls will be able to exist side by side, with Eastgate Quarter targeting luxury brands and Trinity Leeds traditional high street retailers including Mango, Hollister and Cult.
Trinity Leeds has eight entrances and is surrounded by Leeds’s three busiest shopping streets, as well as being close to the train station, one of Britain’s busiest rail terminals. The mall has shops on three levels and is topped off with a glass dome which fans out from the ground and leaves the centre open at the sides to give it an airy feel, less like an enclosed mall.
Another draw will be a new 13,000-seat music venue, Leeds Arena, which is due to open its doors by early summer next year.
Trinity Leeds will create 3,500 retail jobs – about the same number as at its out-of-town White Rose mall – and up to 1,000 temporary construction jobs with 50 apprentices also being trained on site.
The centre will be the only major mall to open in the UK in 2013, while the projected completion of 355,000 square feet of shopping centre space across the country this year is the lowest annual figure since the early 1960s.
Some 80% of the shop space at Trinity Leeds has already been let to retailers led by Marks & Spencer, Primark and Next. Shop rents are expected to range from £250 to £300 a square foot. With the city ranked the fourth biggest shopping destination in Britain in terms of spending – behind London’s West End, Glasgow and Birmingham – Land Securities and analysts are confident that it will be a success.
Land Securities also wants to expand White Rose, which opened in 1997. Some retailers, including New Look, Primark and the shoe shop Office, are taking space both at White Rose and its larger sister in the town centre. Harm Meijer, an analyst at JP Morgan Cazenove, thinks Land Securities will do fine in Leeds and that the city will become one of its biggest development profit drivers. “Leeds is getting busy indeed, but I would be more worried for those who may get squeezed,” he said.
Shopping centres are desperately trying to keep up with changing customer habits and tastes. Land Securities provides free Wi-Fi at all its malls, and large digital interactive screens with music, information and games will be dotted around Trinity Leeds. Retailers will also do their bit. New Look will have iPads for the public to use at its store.
The old rule of thumb was that restaurants, bars and cafes made up 10% to 12% of shopping centres, but that figure has risen to 20%. “Modern schemes have to have more leisure,” said Land Securities’ chief spokesman, Donal McCabe. “People are going [to malls] less often but are staying longer. You can’t eat out on the internet. Even in the downturn, the leisure spend has held up better than the retail spend.”