A number of the UK’s leading commercial property development and investment companies are engaged in a battle with Australian giant Westfield over the future of a London shopping mall. In a deal welcomed by Mayor Boris Johnson, it appeared that Westfield had reached agreement with the freeholder and 25% leaseholder of the Whitgift Centre to redevelop the ageing site. Now the other two leaseholders have thrown the doors open to other parties provoking a row that threatens to escalate.
The Whitgift Centre in Croydon was opened in 1970 and is in need of major refurbishment. Westfield, which recently opened a 1.4 billion retail development close to the Olympic Park, thought it had reached an exclusive deal with the Whitgift Foundation to transform the mall. This drew an angry response from fellow leaseholders, Royal London Asset Management and the Irish Bank Resolution Corp (IBRC) who claim they were not consulted about the deal.
Subsequently they have announced that they have invited more commercial property developers to submit proposals for the site. These include British Land, Land Securities, Hammerson, Lend Lease and Delancey. It is believed that this list was compiled without the knowledge of the Whitgift Foundation, a charity with links to the Church of England which has a substantial property portfolio. Royal London and IBRC say they will offer the winning company a 25% share of their stake and responsibility for the administration of the site.
These developers are due to present their proposals shortly but the standoff between the parties has dismayed Croydon Council which is keen to see the site redeveloped as part of its broader urban regeneration programme. Chief executive Jon Rouse welcomes the fact that the centre will be refurbished, but regrets the delay the row may cause. He says: “It’s clearly very good news that Westfield is considering Croydon. But there has to be a process of consolidation. We hope that can be achieved through commercial negotiations.”
The Evening Standard reports that Croydon Council is eager to proceed with the plans and speculates that they could consider a compulsory purchase order to settle the dispute if it threatens to drag on. Not everyone shares this enthusiasm for big retail commercial property developments however. Westfield’s Stratford City development met with opposition from local businesses, some of whom claim to have seen a decline in trade by as much as 90% since the centre opened last September.
One local trader complains that retailers are struggling to survive in the shadow of Stratford City. He says: “If you go over to Westfield it’s heaving with people. Quite clearly we are going to be destroyed ultimately. We haven’t got a long term future.” Nevertheless one thing seems certain. Large retail commercial property developments in Stratford City and the Whitgift Centre will remain highly valued by investors due to their ability to ride out the unfavourable economic conditions that have caused so many problems for high street outlets in recent months.
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