Do Manchester Retail Parks Have A Future?
Whether it is good timing or good judgment, now is certainly the moment to rethink out-of-town retail parks, and Nuveen has grasped the opportunity.
Consultation has begun for a rethink of its 325K SF scheme at Manchester Fort Shopping Park in Cheetham Hill.
A cinema, a hotel and flexible retail space are promised in the Manchester Fort 2020s Vision — a draft Development Framework that, once adopted formally, will guide future development of the Manchester Fort Shopping Park.
Manchester Fort in Cheetham Hill opened in 2005 and with 36 units it remains the largest shopping park of its kind in Greater Manchester.
The document, drawn up by Turley, envisages further steps away from bulky goods retail and into the more solid territory offered by brands such as Next, H&M, Boots and M&S Food. It will yoke the site to the 15,000 new homes being built as part of the immediate area’s Northern Gateway initiative. Largely dead frontages are to be revived. Halfords and B&Q, the last remnants of bulky goods retail, will provide the space for new thinking as the scheme pivots to a more local, more leisure-oriented focus.
Nuveen confronts the same dilemma as other owners and investors in retail parks. The last five years has seen a withering of the special kinds of large volume retailers on which they depended: The failures of Maplin Electronics, Toys R Us and Poundworld, each of which took large out-of-town retail park portfolios, has been compounded by trouble at BHS, Debenhams and Marks & Spencer. More woe from the mid-price diners is likely to follow. Even Next, the linchpin of the modern retail park, looks a little less rosy than it did with announcements last week that online sales were racing ahead as in-store takings continued to plunge.
The hope had been that out-of-town retail made for ideal socially distanced shopping, but the news for many retail parks is grim. This week the 199K SF Fiveways centre in Birmingham fell into administration along with two others controlled by Blackstone and Abu Dhabi investors. The mix of closed cinemas, closed casinos, closed gyms and closed bars and restaurants proved too much, and a sale is now pending.
Simultaneously, sniffing a change in the air, RDI REIT offloaded its UK retail parks portfolio for £156.9M, a 3% discount on the book value reported in February 2020 but, in the circumstances, not a bad price. The transaction will be used to pay down approximately £100M of the AUK revolving credit facility with the remainder held in cash to enhance cash and facility headroom.
JLL has suggested, on the basis of global experience, that big-box retail could be reborn as urban logistics floorspace.
Pressure on the logistics sector to keep pace with the boom in online shopping is prompting developers to convert large-format retail sites into warehouses.
“While big-box retail — those sprawling megastores that have proliferated in recent decades — has performed well compared to other parts of the sector over this year, investors and developers are looking to conversions in a bid to take advantage of the higher returns and strong rental growth of the logistics sector,” JLL said.
Uncertainty about the future of out-of-town retail has begun to attract opportunistic investors, Savills reported in June 2020.
