Plans to develop a designer outlet village at London’s O2 Arena will go ahead, despite the proposed developer having pulled out of the scheme.
Drapers revealed this week that Land Securities had walked away from talks with the owner of the O2 Arena, AEG Europe, to develop a 230,000 sq ft designer outlet with room for up to 110 new shops, most of which are expected to house fashion retailers.
The developer had entered into a six-month exclusivity agreement with AEG in January to work up plans for the Designer Outlet Village, which would be built in vacant space once earmarked for a super casino at the Greenwich leisure venue, but the two have failed to agree terms.
It is thought the deal broke down because of Land Securities’ current pipeline – which includes developments in Oxford and Glasgow – and its acquisition of a 30% stake in the relatively nearby Bluewater shopping centre in June.
AEG is now expected to continue with the plans and will seek another partner. Work on site is scheduled to start as early as next year, with the proposed outlet to open in 2017.
AEG is thought to be looking to attract premium fashion brands and retailers rather than luxury designers, as for the latter the scheme is likely to be considered too close to their West End flagships and many already have sufficient outlet space at Bicester Village.
One source close to the project said the opportunity for retailers at the O2 was huge as “the turnover per square foot would be the next best after Bicester Village”.
The source estimated around two-thirds of the stores could be occupied by fashion retailers. Talks with retailers about signing for stores are expected to start after the summer.
The aim of the proposed designer outlet is to transform the evening-centric leisure venue into an all-day attraction.
Fashion retailers are expected to be attracted to the scheme by the eight million annual visitors to the music venue, and its location above a key London Underground station, which has proved lucrative for both Westfield Stratford and Westfield London.
But concerns persist that the scheme will be too close to existing West End stores and could cannibalise sales. One premium retailer said: “A huge and disproportionate share of our business goes through London as we’re a global brand. Why would we put an outlet store so close to our full-price trade. My level of interest in this in central London is low, I would rather focus on getting my full-price locations absolutely right.”
The O2 designer outlet plans come after developer Quintain opened the London Designer Outlet in Wembley, north London, in October last year.
Land Securities and AEG declined to comment further.