Despite its “Steel City” nickname, Sheffield as a retail centre has historically been rather meek and punching considerably below its weight. The 1990s construction of Meadowhall, a giant shopping centre next to the M1 – ironically enough on the site of an old steelworks – saw city centre trade suffer, and frightened away developers and investors. The sole managed shopping centre in the city, a 1960s developed scheme called The Moor, spent the next 20 years in quiet decline.
Nevertheless, we knew the area offered significant potential and acquired the Moor in 2010 for one of our property funds. Our long-term plan was to redevelop the scheme in phases and to participate in the gradual regeneration of Sheffield city centre. After all, Sheffield is the fifth largest city in the UK and the eighth largest urban area. Its status as a retail centre – 19th on retail consultancy Javelin’s “VenueScore” rankings – continues to suggest a city not reaching its significant potential.
But the transformation of The Moor, as one of a number of development projects to have a positive impact on the city, is a true success story in a difficult retail climate. Midway through this phased transformation, the benefits of specialist asset management are already evident: footfall at Christmas 2016 was 14%1 higher than 2015 and visitor numbers across 2016, as a whole, were up 7.2%1 year on year.
Retailing is evolving rapidly: consumer behaviour is changing; demographics present a major challenge to spending; and technology continues to be disruptive.
In our recent paper, “No longer the mall the merrier”, we highlighted some of the considerable challenges that shopping centres face. Retailing is evolving rapidly: consumer behaviour is changing; demographics present a major challenge to spending; and technology continues to be disruptive. The historically strong performance of shopping centre investments is unlikely to be replicated in future. In such an environment, shrewd stock selection and specialist management are essential to delivering performance for clients.
One key factor in identifying the right stock for shopping centre investment is whether it has a destination or convenience status and its competitive position. It is clear that Sheffield city centre has very strong competition from Meadowhall and, when Aberdeen acquired The Moor, the city lacked a strong focus or a cohesive mixed-use destination. But given the city’s size, the latent potential to create one represented a significant investment opportunity. The Moor had the critical mass – the site covers 25 acres – but it has taken vision and capital investment to unlock it.
Creating an appealing destination and driving footfall to The Moor were at the core of the specialist asset management that Aberdeen implemented on the scheme. The second phase of the development is now close to completion and will deliver a brand new nine-screen cinema and a cluster of restaurants focused on family dining in the city. This is in sharp contrast to the weak and isolated existing cinema offer. The second phase will also create flagship stores for Next and Primark at the heart of the development, which will add to the existing anchor of Debenhams.
While many will equate destination retail with the upscale and luxury retailers only found in the highest-profile shopping locations, understanding the catchment – and the potential catchment – is paramount. With a high student population close by and The Moor representing a major bus terminus, the scheme also provides a convenience function; grocery and affordable retail is an important part of the mix.
But there are some more unique elements to the scheme that enhance its appeal and ensure it has the diversity to draw in consumers. As part of the redevelopment, a new market hall was built for the Moor Market. While this is outside of Aberdeen’s ownership, it is a popular and complementary offer to the rest of the scheme. We have consciously tried to retain well-regarded independent operators on the streets that feed into the main shopping street. Furthermore, the wide, pedestrianised thoroughfare provides space for carefully curated events that ensure there are regular unique experiences to drive footfall.
Continuing that theme, phase three will be anchored by the affordable fashion retailers H&M and New Look. But, again, mixed uses will be to the fore with the addition of a bowling complex at basement level, which will enhance The Moor’s appeal to families. Purely retail-focused shopping centres are more susceptible to sales being diverted to online channels and a strong leisure offer, alongside convenience-oriented elements, is defensive against this inexorable trend.
There is no denying that the growth of e-commerce is an enormously disruptive trend, which puts severe pressure on retailers’ profit densities and will hold rents down in many locations. Relentless advances in technology are engraining behaviours in consumers that will not be reversed. It is vital that retail property owners adapt to structural change and seek havens in experiences that consumers can’t get online.
Ultimately, shopping centres with a good mix of retailers, experiences and services will continue to play an important role as destinations where consumers gather and interact socially. But successful shopping centres must be at the forefront of change and they must continuously invest in maintaining the vibrancy and diversity required to encourage their consumers to return, week after week. The Moor shows that by recognising and adapting to the changing face of retail, careful stock selection and the application of specialist asset management can continue to deliver strong results for investors and consumers alike.
A version of this article has previously been published in IPE Real Estate.
Editorial image credit: VIEW Pictures Ltd / Alamy Stock Photo
1Source: Springboard and JLL