Councils spend £1bn on shopping malls
Written by Peter Walker
Councils around the UK are set to spend £1 billion on buying shopping centres in an attempt to redevelop town centres hit by recent store closures.
Research from shopping centre trade association Revo and property advisory firm Lambert Smith Hampton (LSH) found that local authorities have spent a record £775 million buying shopping centres over the past three years, with a further £230 million planned for next year.
Steve Norris, head of planning, development and regeneration at LSH, commented: “A lot of shopping centres are being bought for regeneration, they might be failing assets in town centres where shop vacancies are high – councils are going in to revitalise those sites, bringing in residential above or repurposing vacant units with something other than retail.”
One in five shopping centres that have changed hands since 2016 have been acquired by local authorities, as private sector investment has pulled back during the period, with an estimated 16 shops a day closing their doors across the country, squeezed out by the rise of online shopping and increased costs from business rates, wages and the fall in the value of the pound.
However, funding available from the public works loan board has allowed councils to bid higher sums for property and get better returns on investment than private funds.
Norris said that council buyouts could be a “catalyst for change”, but only where they were “underpinned by robust and fully costed business plans and investment strategies”.
Successful schemes include Altrincham, where Trafford Council invested in the town’s listed market hall, which was then revitalised as a fashionable dining space in partnership with a private investor.
Norris noted that redevelopment could take several years to complete and it was too early to judge the success of many schemes. “Only a few local authorities have actually stepped into the market, but a number I speak to are in the process of developing strategies and looking at purchasing assets now.”