Shopping centre owner boosted by Primark-effect

THE introduction of a new Primark store in Shrewsbury is likely to have a regenerative effect on the town centre as a whole, a property company has said.

UK Commercial Property Trust (UKCPT), which owns the Charles Darwin Centre in the town, said work on the fashion retailer’s anchor store in the centre’s main mall was now under way.

Building contractor McLaughlin and Harvey has been appointed to create and deliver the new store, which is scheduled to open next spring.

The company will be keen to see any regeneration as the centre is currently its largest void.

In its half-year results statement, UKCPT said: “Aside from improving net operating income in its own right, the new Primark anchor store will significantly improve the attractiveness of this shopping centre for other tenants, creating, we expect, a snowball of interest further improving net operating income in what is the company’s largest current void.”

It said the ‘Primark-effect’ was already having an impact as the mall had secured two new tenants since work started.
New leases have been agreed with Australian stationery and card retailer, Smiggle, and Costa Coffee.  Smiggle opened last month and Costa is due to open in October.

The trust said the agreements followed negotiations between the various parties as part of UKCPT’s contractual commitments.

“It is encouraging to see new retail tenants entering into leases at the Charles Darwin Shopping Centre, encouraged by the pre-let Primark anchor store.   We attribute an early new letting to Costa Coffee directly to the Primark announcement,” it added.

For the retail sector in general, while not a big part of the trust’s overall portfolio, the trust said the market had been polarised towards the prime and good secondary spectrum, although significant risk remained in the poor secondary and tertiary locations.

“After the EU Referendum we continue to witness positive signals from the retail occupational market in good locations although, as before, rental growth in all but the best locations remains subdued,” it added.

“Turning to asset management it is noticeable, when compared with the benchmark, that the company’s portfolio has low vacancy (2.8%). Whilst we are very pleased this low rate continues we aim to augment net income through a focused strategy on leasing activity within the shopping centre assets of Swindon and Shrewsbury.”

It said the closure of BHS had impacted the business and the loss of the retailer its Swindon property, The Parade, was likely to lead to a one-off £8m write-down.

This resulted in the trust’s retail total return being 0.5% for the half-year against 1.8% for the benchmark.

“The ongoing strategy for the company’s shopping centres, which account for less than 8% of portfolio value, is to maintain and, where possible, improve the net operating income at each centre,” it said.