BOOM TOWNS
After years of decline, investors are pumping tens of BILLIONS into a high-stakes bid to turn a carefully chosen group of shopping areas into Britain’s new...
SOME of the UK’s biggest investment firms are placing a multibillion pound bet that is triggering a startling rejuvenation of many neglected town centres.
Customers have been turning their backs on local high streets to spend more cash at accessible out-of-town retail developments and on the internet.
However, many towns are now poised to get an overdue new lease of life as councils work on ambitious plans to turn around the fortunes of high streets by throwing the doors open to big money from the City.
Property sources say the amount earmarked for widescale redevelopment already amounts to tens of billions of pounds.
Dozens of towns have been identified as potential beneficiaries and are eagerly waiting to capitalise on the trend.
The first of the new developments will be officially opening in Bracknell, Berkshire, in September. The £240 million scheme is being backed by Legal & General and Schroder UK Real Estate Fund. It is part of a wider £768million regeneration of the borough.
The Lexicon project – the first comprehensive reinvention of a post-war new town – covers an area the size of nine football pitches. There will be a variety of retail units, both under cover and in the open air, along with leisure facilities including a 12-screen Cineworld, plus more than 3,800 parking spaces. In addition, there will be more than 1,000 new apartments.
Stores will include Fenwick, Waitrose, Marks & Spencer, Primark and H&M. There will also be restaurants and a pub.
L&G is also working on huge schemes covering parts of Leeds, Cardiff, Cambridge, Poole and Eastbourne.
Bill Hughes, head of real assets at L&G, said: ‘The UK has experienced decades of underinvestment in the built environment. Alongside that there has been a disjointed, silo mentality towards redevelopment which only considers projects sector-by-sector – commercial, residential, industrial – rather than as a whole.
‘This is about joined-up thinking. If we find the right places, we can invest significant volumes of capital and we can think about how retail, offices, industrial, residential, hospitals, prisons, schools, transport and renewable energy all come together rather than thinking about one or two sectors at a time.
‘We now have 150 people doing this. It is a significantly sized, dedicated, in-house team.
‘Why wouldn’t we – as the guardians of the capital that belongs to the pensioners and savers who themselves live and work in the built environment – put that money to good use in those places? This is about creating the assets we want to own long term, not maximising short-term gain.’
Investment firms have been searching for alternative moneyspinning ideas in part because the returns on routine projects have been languishing at all-time lows.
Nationwide last week revealed that it aims to invest ‘billions’ in building schemes designed to ease the housing shortage.
The building society’s chief executive Joe Garner told members at a meeting: ‘We are asking ourselves the question how could we make a bigger, more direct impact in a positive way?’
At the same time central and local government have been left strapped for cash as a result of economic austerity which has seen budgets repeatedly cut year after year.
Meanwhile, HS2 – the planned high-speed rail line to the North of England from London – and Crossrail are also playing a role in the redevelopment of towns.
Bracknell is no more than 20 minutes from three Crossrail stations. Nearby Maidenhead is also being reinvented.
The deal on the table is that councils and central government are paving the way for redevelopments that are often hamstrung by fragmented ownership in town centres and planning restrictions that prohibit fundamental change.
These are the types of problems that have contributed towards the paralysis of town centres and left them increasingly out of sync with 21st Century demands.
‘Our job is to be selective,’ says Hughes. ‘There is not a future where there is going to be a vibrant town centre everywhere.
‘We understand the threat of internet retail is real but there are also locations where people still want to spend time shopping and these will continue to be vibrant places.’
One town centre investor, who asked not to be named, said: ‘This is not about exploitation. This is about the long-term future of town centres that are fit for purpose and benefit everyone. The total investment certainly runs into tens of billions of pounds.’
Not every town in Britain will be receiving the considerable benefits of a facelift. Certain places have become too run-down as a result of a sustained exodus of the population or an irreversible industrial decline.
In addition, some councils ‘don’t get it’. Hughes added: ‘If there are obstacles or uncertainty, then private capital won’t want to be there.
‘This is about creating a sustainable investment and bringing material change to what towns have to offer.
‘If we have the right conversation and investors and councils are aligned then we can get there.’