The UK’s north-south divide has eased as regional cities continue to “gain momentum”, chief executive of property firm Hammerson David Atkins said last week.
Grand Central shopping centre in Birmingham
Hammerson, which owns several UK shopping centres, including the Bullring in Birmingham and Brent Cross in London, reported a 2.3% increase in like-for-like net rental income to £318.6m for the year to December 31. It attributed this to a rise in consumer confidence and “greater retailer demand” across the whole of the UK.
“We are seeing the rest of the UK [outside of London] gain momentum. There isn’t the same division there was two or three years ago,” said Atkins.
“The market is split a lot more now and retail sales have improved in other areas of the UK, whereas the risks for businesses are often greater in London. Many businesses are relocating out of London because rents are too high, so places like Birmingham and Leeds are benefiting. It’s a more balanced, healthier picture.”
Atkins said Hammerson had noticed a growing preference for large “showroom” stores and much smaller formats, rather than medium-sized units.
“The major international retailers are demanding big shops where they can show off their best-in-class shopfit,” he explained. ”On the other end of the scale the 2,000 to 2,500 sq ft stores do well with accessories companies, and those that are new to the UK and are still testing new formats.
“The challenge is the medium-sized stores, but we have the option to expand them or split them in two.”
Hammerson’s profit including valuation changes was up 4% for the year.
“Commodities like petrol, gas and electricity are all lower so consumers have more money in their pockets and are feeling more confident to spend,” said Atkins. ”I believe the improved spending will continue despite worries about the Chinese economy. When that settles down the net result will be positive.”
Hammerson bought the Grand Central shopping centre in Birmingham – home to John Lewis, Fat Face, Monsoon and Hobbs, among others – for £335m at the end of 2015.