Property: A true test of Yorkshire grit

In May, eight of Yorkshire’s towns and cities were deemed to be on the recession at-risk list in a CACI Retail Footprint 2009 rankings report, which takes into account the retail presence and catchment spending power of every major shopping destination in the country.

What’s more, out of the five least recession-proof centres in CACI’s report, three – Scarborough, Hull and Bradford – were Yorkshire towns. It doesn’t bode particularly well for the property scene in the county.

Part of the reason for this rapid decline may be the heavy levels of unemployment. After many years of boom – particularly in Leeds – it would seem the bust is hitting it hard. Unemployment for Yorkshire and the Humber has risen nearly 3% in one year to 8%, well above the national average.

Of the many shopping centre schemes to have been delayed or shelved around the country, Yorkshire has suffered probably harder than any other county. Leeds, Bradford, Sheffield and Wakefield have all been hit over the past year by the news that the shopping centres that were meant to come along and provide a lift to these cities will not happen on time.

So what are the prospects for the Yorkshire market and who could stand to gain from this tough economic climate?

Land Securities head of development partnerships Bob De Barr, who heads up the delayed Trinity Leeds development, admits that it has been a tough project and that leasing is likely to be challenging for some time, but is confident of the long-term prospects. “There’s tremendous potential in Leeds and the retailers agree,” he says. “But it’s difficult talking to retailers about something that’s three years away. Their plans don’t extend to that sort of length because they’re thinking about surviving now.”

In shopping centre terms there are five big black spots in Yorkshire. In what has been an eventful 12 months, Land Securities has put back work on its Trinity Leeds project by a year, Westfield has announced that no further work is to be carried out on its Bradford scheme for at least a year, Hammerson has put two schemes on hold in Sheffield and Leeds, and – in the most dramatic symbol of the impact of the recession on retail property – Modus’s Trinity Walk project in Wakefield has been abandoned midway through construction.

The much-heralded 500,000 sq ft Trinity Walk scheme was meant to lift the town’s profile on the retail scene when it opened in spring next year, but Anglo Irish pulled its funding on the £200m, 500,000 sq ft scheme in March. Discussions are still under way to try and secure new funding.

Particularly troublesome is the fact that all of the schemes are major regenerative projects that are meant to transform their respective cities. The 1.5 million sq ft of space that was originally due in Leeds by 2013 was meant to bring the city’s retail offer into the 21st century. In Sheffield, Hammerson was by now scheduled to be on site for the building of Sevenstone, which was due to bring an extra 860,000 sq ft of shopping centre space to the city, including a 260,000 sq ft relocated John Lewis store and win back shoppers lost to Meadowhall.

These delays are resulting in a serious blot on the retail property market in Yorkshire’s towns and cities because some retail brands – already putting the brakes on their expansion plans – are being deterred from opening up stores in these locations and are choosing different areas of the country altogether.

Stephen Henderson, Savills associate director in the agency’s Leeds office says: “The delays to these schemes will delay the retailers coming to the towns. Before they take a store they need to be able to see what’s going on here first. I’ve got no doubt that the schemes will come on, it’s just a matter of when.”

But despite the fact that the property scene is struggling in Yorkshire, those shopping centres at the value end of the market are still relatively buoyant. The Merrion Centre in Leeds and Crystal Peaks in Sheffield are both aimed at price-conscious shoppers and both have had a good run of lettings this year. Henderson says: “These towns are repositioning themselves. The high end of the market seems to have slowed down and suffered the most.”

When rent-to-buy furniture and electricals retailer BrightHouse opens its store in the Merrion Centre this autumn, it will join a number of other value retailers – including Home Bargains, which has taken the former Woolworths store and Ethel Austin – that have all signed for new stores this year. The downturn is also helping value retailers that might otherwise have struggled to secure units in their locations of choice – even if those locations are at the value end.

The Merrion Centre had been on  BrightHouse’s wish list for some time. John Mortimer, director of the retailer’s sole retained agent Smith Price, is forthright about how the problems in Leeds caused by pipeline delays have presented an opportunity for certain retailers and that for some, now is a good time to expand.

“It can work both ways,” he says. “It’s always important that when a retailer turns up in a town it doesn’t see big swathes of it rotting because that will influence its view of the city, but for value retailers like BrightHouse there are opportunities that have only opened up at places like the Merrion Centre because of the way the market is.”

Another company that is taking advantage of the downturn is value homewares retailer Home Bargains. Operations director Joe Morris says the company hasn’t suffered anywhere near as much as some other retailers and still has big plans for Yorkshire.

“We do very well in Yorkshire. We’ve been here for a long time and we’ve got about 20 stores. For our market where you’re offering a great price the customers are keen for us to open and we’re looking for more stores,” he says.

The property scene in this area of the North of England appears to have suffered more than many as the recession has hit. But, as always, there will be some winners. And in the short term, for both retailers and shopping centres in the value sector at least, now is their chance to make significant gains.