‘I don’t see what’s going to be left here by Christmas at this rate’
Friars Walk was turning away offers when it first opened – but what’s next for Newport’s biggest project after a ‘calamitous’Covid pandemic? Ryan O’Neil reports
ON a cold Thursday morning in November five years ago, queues of people waited outside in anticipation as the gleaming new Friars Walk shopping centre prepared to welcome shoppers for the first time.
Set over two levels, and contrasting with the older, adjacent Kingsway Centre, the development felt exciting and fresh.
Newport MS John Griffiths and then-First Minister Carwyn Jones were taking selfies in front of the sparkling interior, and there was a carnival atmosphere.
For traders, shoppers and politicians alike, it was the culmination of years of false starts and efforts to bring a state-of-the-art shopping centre to Wales’ third city.
It had taken years of work, following the 2008 financial crisis, and a bill approaching £100m to get here.
With the opening of the shopping centre and the creation of more than 1,200 jobs, there was a sense this could transform Newport’s beleagured economy.
While greeting excited shoppers, cameras and reporters, Paul Sergeant, CEO and founder of Queensberry Real Estate (QRE), said that day: “People were wondering why we were bothering to look at Newport, but we do love a challenge. We saw Newport as the next big opportunity.”
Twenty-five stores, six restaurants and the eight-screen Cineworld multiplex opened on day one, with the developer saying 85% of units had been let out with another 10% in negotiation at the time.
Such was the demand that developers claimed they were “turning away offers” if they didn’t think they were right for the centre.
Five years on, with retail facing an existential threat like never before and a global pandemic thrown in for good measure, things look a lot different.
In the past few months, coronavirus and the changing nature of retail has seen a host of big names depart the centre.
Topshop announced in January it was to close its store.
Schuh, Carphone Warehouse, Flying Tiger and The Body Shop have since all either left or announced their closure.
Other restaurants, like Zizzi, have seen their parent companies go into financial difficulty over the past few months, and their future remains unclear.
In 2015, Krispy Kreme was offering free doughnuts for a year for the first customer through the door.
That store, too, has gone.
Alongside units which were never filled are scatterings of empty shops – 21 to be precise, or around
39% of the shopping centre’s units.
What does all this mean?
Faced with Wales’ second recession in just over a decade, where does Friars Walk and trade in the city centre go from here?
For its part, the sale of the shopping centre to Canadian company Talisker Corporation in 2017 allowed Newport council to pay off the £90m loan it had taken out for development.
But with shops closing so frequently, what impact is this now having on the council?
A 2017 Cabinet report following the sale said an “investment subsidy arrangement was based on the council agreeing to pay up to a maximum of £500,000 per annum for a fixed period of 15 years, to effectively guarantee the level of net rental required to secure the full purchase price and the bank funding” to the buyer of the centre. It continues to say that “in reality, the subsidy is only intended to cover any rental shortfall for the first few years of trading”.
In the same report, the chief financial officer said: “There is a potential future payments in relation to the investment subsidy, however this is based on a maximum amount over 15 years of £7.5m, and as detailed in the report with future lettings, rent reviews and growth in the scheme it is unlikely that this subsidy will be payable after a number of years.”
With the gleaming new shopping centre came renewed hopes of further development in the city centre.
This has happened, to a degree. But progress has been slow.
A multi-million pound redevelopment of Chartist Tower is in the final stages, with some tenants already in the tower and a 15-storey, 150-bed Mercure Hotel set to open in the new year.
Work has also been done on the 50,000sq ft former sorting office on Mill Street, which developers GBE recently said was now “back on target for Q4 completion” after a brief delay during lockdown.
There has also been movement in recent weeks on the much-anticipated regeneration of Newport Market, where developers hope to break ground in November.
In September 2019, the £84m International Convention Centre Wales at the Celtic Manor opened, bringing with it hopes of moulding Newport into an attractive destination for conferences and exhibitions.
But behind the facade of all the advances in hospitality and conference space, retail has struggled, while the same old bugbears have persisted – parking issues and the difficulties facing high
streets up and down the UK.
One man who believes Newport shouldn’t even be in this position in the first place is Graig councillor David Williams, who was the only councillor to vote against the shopping centre development at a council meeting in November 2013.
At the time, he said he believed in the power of the markets.
Reflecting back on the decision, he said: “I always felt that if the market wouldn’t fund the shopping centre, that should have told the council there wasn’t an appetite for that kind of development anymore.
“It was only because the council managed to borrow the money that it went ahead.
“They do have an agreement where if the rent doesn’t reach a certain level they’ve got to pay a certain amount, so they could be on the hook if shops are closing down.
“The rest of the city centre has been neglected. There should have been more work on Newport being a secondary shopping destination, and perhaps it would have been more robust in an economic downturn.
“Newport was instead trying to compete against the likes of Cardiff and Bristol, and to a lesser extent Cwmbran.
“It is quite calamitous because it will be some time before these businesses revive themselves. There’s Covid-19, but also a lot of the bigger stores have a huge online shopping presence. That’s not going to change now, it’s just the way it is.
“It’s the old story of putting your finger in the dyke to stop it leaking and it bursts out somewhere else.”
Cllr Williams aid if the Covid pan
demic was to continue for a year, he has no idea what will happen.
“I never changed my mind about voting against it. Once private money couldn’t provide it, it shouldn’t have been built.”
While trade has somewhat rebounded since shops began to reopen after four months of closure, many companies are already facing record losses due to coronavirus.
Job cuts have come thick and fast during lockdown.
Debenhams announced last week it would be making more cuts than initially planned, while Boots and a host of other companies have also announced redundancies.
Last week also saw the UK officially enter recession after the economy plunged 21%.
With conferences and major events off the cards for now, it is difficult to see where shops in Friars Walk make their money to pay rent.
Businesses outside the shopping centre are facing a tough time getting back on their feet, too, with one claiming he would have to work 16 hours a day to afford shopping centre rates.
Alan Edwards, from Vacara’s chip shop, is a part of Newport Business Improvement District (Newport BID).
He said the pandemic has accelerated the need for a fresh approach.
“In Newport we put all our faith in two areas, IT and hospitality. In the case of hospitality, coronavirus has wrecked that for the time being. It might come back.
“I know of people who are building offices permanently in their houses, and working from home is going to be increasingly done going forward. So commuters, people coming into Newport to work, they won’t be there.
“Building totally residential areas, flats, has to be looked at. If you want shops to survive you’ve got to give them people living in the city.
“I looked at a unit in the shopping centre a few years ago, and calculated that I would have had to work flat out 16 or 17 hours a day, seven days a week. I spoke to other traders about what they needed to do to break even, and decided it was too much of a risk.
“For me, it was cost prohibitive as an independent, to commit yourself to that kind of money.
“The independent traders leaving the market, I’d love to see them put into the shopping centre.
“The company has to realise that they have an asset that isn’t bringing them money in. [Large national brands] coming in, that’s gone.
“If someone offers £10,000 for a unit and you want £20,000 – why wouldn’t you take the first one? It’s better than nothing.
“It’s hindsight, but I think the local authority would have been better off keeping, owning it and doing the local deals for people.
“The fact it’s owned by a foreign company that doesn’t really care about Newport is a problem.
“At the time, we knew Marks & Spencer wanted a new building. You could have kept John Frost Square, perhaps made it smaller, built a new building for M&S and make the other buildings around it better. You didn’t need [what is there now].
Tracy Stokes, who runs La Belle Femme women’s shop, a stone’s throw from the shopping centre, said more needed to be done to encourage tenants to come in.
“It’s not good news, all the shops going there”, she said.
“I know the landlord has bills to pay, but they’ve got to do something to help by reducing rents or dividing up the units to help get independent businesses in. Why not offer reduced rates?
“People are doing their shopping online now, especially with what’s going on – they need to bring in the online tax that’s being talked about, because they’ve got away with it for too long.”
Her colleague Sharon, who works in the same shop, said things have been going well for them since reopening, and hopes they can keep it going despite the struggles next door.
“We’re doing well”. she said. “A lot of our customers are older and are just getting to the point where they’re coming back out again. It’s a very personal, one-to-one experience for them in the shop so we’re doing our best to make them feel safe when they come in.
“We’re positive at the moment, we’re ordering new stock in every two weeks because at the moment, it’s selling.”
In the city centre, businesses are clearly worried about the closures in Friars Walk, too.
One trader in the shopping centre, who wished to remain anonymous, said it “was planned incorrectly”.
“There are a lot of very big multiples there, there are units with huge rents. I think it didn’t diversify its offering enough in terms of having enough different sized units that could accommodate different types of businesses.
“You’ve got so many independents around, in Cwmbran, Brecon, Newport – but they’re all scattered, there’s no real way of bringing them together.
“As far as I’m concerned, the shopping centre has failed. I don’t see how it can survive in the long term.
“Parking is still an issue, and people feel intimidated walking through the high street here.
“It may be that the big companies have contracts coming to an end and might see now as a good time to make people redundant.
“I do fear where the jobs are going to go if things keep going the way they are in retail. When manufacturing went all those years ago, it was retail where people went for jobs.”
Another trader in the shopping centre, who also asked to remain anonymous, said: “I don’t see what’s going to be left here by Christmas at this rate.
“One of the major problems is the business rates and the government.
“If you wanted, you could get a big warehouse and between staff and everything else it could cost less than what rates cost in a shopping centre.
“It’s not just Newport, and not just retail, it’s everywhere at the moment.
“If you look at Debenhams, I know the council has helped them out, but they’re still struggling everywhere. I can’t see them being around as a company this time next year, if I’m honest.”
Speaking to shoppers in Newport, it’s clear there are a number of problems facing the city centre.
Ellie Matthews, a 21-year-old student, said: “It’s a pity to see shops going, Debenhams is great at Christmas. I’m gutted to see The Body Shop going as well.
“With stuff closing, to be honest I’ll probably just go to Cardiff to shop. But Covid-19 has affected everywhere hasn’t it?”
Judes Churchill, from Bettws, says she prefers to go to Cwmbran.
“Cwmbran is easy, accessible and hassle-free. I have a bad back so it’s great to go in and out quickly. I’m not one to spend hours and hours shopping, and if I go to Newport I could be less than an hour and still have to pay to park.”
A spokeswoman for Newport council said: “Newport City Council has done everything possible to support businesses both before and during the pandemic.
“During lockdown we have given more than £46m in business support and helped wherever possible.
“For example, we deferred Debenhams’ business rates to ensure it could reopen its anchor store in Friars Walk. Newport is not unique in seeing shops and other businesses close down as a result of changing retail habits and the impact of the lockdown.
“Millions of pounds have been invested in non-retail regeneration schemes in the city centre and that is continuing, despite delays caused by the pandemic.
“We will do everything in our power to do what is best for Newport, its residents and businesses and that will include continuing to talk to key players, including the owners of Friars Walk.”
The Western Mail contacted the managers of Friars Walk, asking to speak to them about the centre, its closures and its plans going forward, but they did not respond.