Can Leisure Really Unlock Covid-Hit Retail Assets? Lenders And Ellandi Bet £50M That It Can
Goodbye old-fashioned shopping mall, hello waterfront leisure destination.
Ellandi, the centre’s operator, and the lenders that own the scheme are banking on leisure occupiers to carry the weight of expectations as England unlocks after 15 months of on-off coronavirus restrictions.
The £50M investment, being funded by a consortium of lenders led by Wells Fargo, will create what Ellandi calls a “leading lifestyle destination” by July 2025.
Plans include the development of a new family entertainment ‘leisure district’, allowing visitors of all ages to enjoy a range of non-retail activities and new restaurants.
Ellandi is heading down a familiar track by putting a new focus on leisure uses in a predominantly retail destination. Confidence that it is the right route, post-pandemic, will be boosted by celebrated examples like the $5B American Dream mall in New Jersey. The 3M SF mall opened in October 2020 and has since thrived thanks to its rides and novelty attractions such as a hyper-reality cliff jump.
Yet other shopping centre owners have preferred to go back to basics, and instead have re-examined their retail letting strategy. Whilst Ellandi said its approach to Merry Hill would be formed around high street names like Next, JD Sport and Primark, Legal & General has turned its back on national brands.
At its Kingland Crescent, part of Poole’s 625K SF Dolphin shopping centre, Legal & General installed what it called “a carefully curated and diverse line up” that includes a fishmonger, coffee roaster, design studio, surfboard shop, zero-waste grocery store, art gallery, gin bar and store, home interiors specialist, restored secondhand furniture shop and perfumer.
L&G also gave the tenants two years rent-free to get the concept going.
The logic is that shoppers will return to malls once they become interesting places to shop.
A similar approach will be rolled out across other UK locations in the next two years, L&G said.
Ellandi’s plans for Merry Hill include upgrades of existing leisure facilities that will be better connected to the main mall. The work will build on the existing Waterfront area that is home to independent eateries, shops, the Resonance music academy and community organisation, Black Country Radio and some housing.
The package comes after Ellandi signed deals to let 126K SF, including a new Hamley’s toyshop, with a further 230K SF in negotiation with another 22 new retailers.
According to research by retail specialists Javelin Group, retailers at Merry Hill continue to outperform at 34% above chain average — despite the coronavirus pandemic and numerous lockdowns — while the centre is the strongest scheme in terms of retailers’ sales performance across its catchment area.
Letting agents are Time Retail Partners and JLL.