Development
Prospects for Land Securities’ out-of-town and edge-of-town developments have thrived after bringing a new partnership strategy into play. By Mark Faithfull
S
ome opportunities reflect perfectly a moment in time and edge-of-town and out-of-town schemes are just such an example. Aside from its shopping centres, Land
Securities previously focused on developing town and city centre locations. However, as
the impact of the global downturn was felt there were increasing viability issues in terms of the costs and potential income from such schemes. Costs were going up but the likely income from potential projects was not keeping pace. Land Securities was one of the first investors in out-of-
town retailing and built up a large portfolio over 20 years, which demonstrated attractive returns for shareholders. In the credit crunch, the schemes proved more liquid due to the average lot size, which was important for the company balance sheet. It made sense to focus on refreshing the portfolio with new prime assets. With increasing polarisation between desirable locations
and those that Land Securities no longer felt would be viable for development, it looked at the opportunities for projects off-centre. The decision coincided with the broader range of anchor retailers, which had begun to look afresh at edge-of-town and out-of-town locations. More fashion and homewares retailers developed formats for such sites, rather than the traditional bulky goods retailers that had previously dominated these parks. Land Securities assembled a team to start looking at the
opportunities strategically and to reach out to key retailers in order to fast-track the filtering process of opportunities, only concentrating on the strongest retail propositions.
Strong partnership Land Securities development director Chris Ward says: “About two years ago we started building a development pipeline; we identified where we believed the demand would be in a rapidly changing world and which retailers we could develop deep relationships with. “We first created the Harvest Partnership with Sainsbury’s
but we also identified that there were other retailers such as Next, Marks & Spencer and Debenhams where this sort of partnership approach would work well for both parties.” Sainsbury’s and Land Securities placed three assets with
development potential into a joint venture holding, which has now increased to seven sites across the UK. In Wandsworth, southwest London, Harvest secured planning consent to enlarge the existing Sainsbury’s store to the biggest in central London with a 120-bed hotel and additional retail. The scheme is now on site and has been pre-sold to PRUPIM, acting on behalf of the M&G Secured Property Income Fund. The Harvest Partnership was retained by the
28 autumn 2012
Crawley Living on
purchaser to manage the future development of the property. The enlarged Sainsbury’s and the new retail unit are expected to open in March 2013 and the hotel in August 2013. “At its heart is the idea of pooling the advantages of having
a strong occupier commitment coupled with the property resource, expertise and balance sheet to deliver,” says Ward. “We still see the quality of the building and environment as critical in the long-term durability of a trading destination.” He adds: “Trying to buy prime stock at the right price
remains difficult and so we have become opportunity-led, working with those who bring us opportunities to create compelling retail buildings with strong investment attri-
Selly Oak, Birmingham
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