Shropshire Council to consider purchase of Shrewsbury shopping centres

At its meeting today (Wednesday 6 December 2017), Shropshire Council’s Cabinet agreed to recommend to full Council that it approves the purchase of Shrewsbury’s main shopping centres at its meeting on Thursday 14 December.

The primary objective for the purchase of the shopping centres is to support the economic growth and regeneration of Shrewsbury town centre.

Background/overview

On 12 July 2017 Shropshire Council’s Cabinet received a confidential report that set out the opportunity for the council to purchase Shrewsbury’s main shopping centres. At this meeting Cabinet resolved “that the Director of Place and Enterprise in consultation with the Portfolio Holder for Corporate Support be authorised to formally express an interest to the freeholder to acquire the shopping centres subject to contract”.

The shopping centres comprise a number of significant assets in Shrewsbury town centre, namely:

• The freehold of the Charles Darwin Shopping Centre, including 11 Castle Street.
• The freehold of the Pride Hill Shopping Centre.
• The vendor’s leasehold interest in the Riverside Shopping Centre.
• The vendor’s leasehold interest in the Riverside Medical Centre.

The report to Cabinet on 6 December 2017 updated Cabinet on progress made towards the potential purchase of the shopping centres. It set out the recommendations which officers considered Cabinet should make to full Council to enable the purchase to proceed.

The report was considered in ‘exempt’ session as it contains commercially-sensitive information.

History/timeline

Shropshire Council has been in discussions with the owners and managers of the shopping centres for a number of years to encourage investment and redevelopment. We believe this to be crucial to enhancing the visitor, retail and leisure experience offered in the Town Centre. This has not proven to be as productive as we had hoped and so the Council has now taken steps to secure more control.

Discussion has focussed on the future development of the shopping centres and how they could be linked together to form a more attractive offer to shoppers.

In particular, the Riverside Shopping Centre comprises a well-located site close to the River Severn, but requires significant redevelopment.

In 2016, the owners made it clear that they were looking to sell the shopping centres, as opposed to entering into any partnership arrangement with Shropshire Council.

An integrated and comprehensive approach is now required to the proactive ownership and development of these important retail assets, which offer a high-quality mixed-use opportunity.

Cabinet received a confidential report on 12 July 2017. This report set out the opportunity for Shropshire Council to purchase the shopping centres. At this meeting Cabinet resolved “that the Director of Place and Enterprise in consultation with the Portfolio Holder for Corporate Support be authorised to formally express an interest to the freeholder to acquire the shopping centres subject to contract”.

Following a competitive procurement process, Montagu Evans and Browne Jacobson were appointed in August 2017 to provide, respectively, specialist technical property and legal advice to Shropshire Council.   Both firms are very experienced and have brought a diverse team of expert advisers.

Work began on the potential acquisition in September 2017.

Montagu Evans have undertaken due diligence on a wide range of property management considerations. Browne Jacobson have undertaken due diligence on a wide range of legal considerations.

Why is Shropshire Council considering the purchase of the shopping centres?

The primary objective for the purchase of the shopping centres is to support the economic growth and regeneration of Shrewsbury town centre; this reflects the wider aspirations and long-term vision articulated in the Shrewsbury Big Town Plan.

The reasons for the proposed purchase of the shopping centres include:

• Support for the development of Shrewsbury as a “destination”.
• Support for an improved and attractive retail and leisure offer.
• Securing employment for Shropshire residents both directly and indirectly.
• Support for the enhancement of the shopping centres.
• Support for some of the council’s key outcomes and strategies (ie. prosperous economy, Economic Growth Strategy).
• In strategic planning terms, the redevelopment of the town centre remains a key policy in the Local Plan and necessary to drive the future visitor economy in Shrewsbury.
• Support for the delivery of the Shrewsbury Big Town Plan by facilitating the economic regeneration of the town centre. This will have potentially wider benefit for the town centre, hotels, restaurants and Shropshire as a county and will support many of the key themes within the Plan.

The proposed purchase also provides a number of opportunities including:

• Greater control of a significant town centre site that will support the development of a wider master plan for the town centre.
• Improving car parking.
• Building a strong relationship with the Shrewsbury Business Improvement District and Shrewsbury Town Council.
• Opportunity to address poor retail linkages within the town centre and an under provision of larger modern units for fashion, discount and family dining brands.
• Opportunity to resolve some of the key transport issues – sustainable transport; links with the proposed North West Relief Road reducing traffic on Smithfield Road; and providing car parking/lifts/escalators for those with needs.
• Generation of a sustainable year on year income stream.

What happens next?

If full Council approval is given at its meeting on 14 December Shropshire Council aims to complete the purchase by 23 January 2018.

Day-to-day management

The management of all aspects of over 113 tenant lets, the properties themselves and the marketing of the shopping centres is a significant challenge. Shropshire Council will ensure specialist property agents undertake this work as well as considering the future development of the sites.

The national context

There is a significant opportunity for local authorities to invest in their areas, regenerating their town centres, unlocking residential and unviable commercial opportunities, extracting key assets which have seen under investment, and creating a healthy cash flow with a sensible approach to risk.

Within the last two years, 15 local authorities have acquired shopping centre investments in their areas for a total of £570 million with a further £220 million under offer or in negotiation.