Hammerson will wade deeper into the sector with a 500-unit BTR at London’s Bishopsgate Goodsyard, and be up to its waist by the time development begins at the Martineau Galleries in Birmingham, where 1,300 units are planned.
The key to the rethink is the so-called City Quarters concept. In essence, this takes the plots occupied by shopping centres (or potential shopping centres) and repositions them as mixed developments, with an anchor in the residential sector.
Birmingham’s 7.5 acre Martineau Galleries site was expected to see a 2.9m sq ft retail-led scheme adding a massive eastern extension to Birmingham’s retail core. Such a plan has been obviously bonkers for several years and, since 2018, Hammerson have been pondering the right mix for what is a prominent site with the benefit of a short-walk to the new HS2 station at Curzon Street.
Hammerson now have permission for a scheme that envisages 1.4m sq ft of workspace and 1,300 homes. The retail content is minimal. There will also be a hotel. All that is needed now is a date for work on site to begin. Given the economic circumstances, that may not be imminent.
But if construction work is pushed back, this will give Hammerson time to work up more City Quarter plans. Some, perhaps many, are likely to be lighter-touch than Birmingham’s, with an emphasis on refashioning existing shopping centres.
This is the approach adopted in Leeds, where Hammerson owns and manages the Victoria Leeds shopping complex. The latest City Quarter twist to the Victoria complex is to add a 205-bed hotel as a way to broaden the scheme’s appeal.
Hammerson is currently in discussions with an international hotel brand looking to bring a new boutique hotel to Leeds for visitors and professional travellers.
Hammerson also owns a 10-acre site just north of Victoria Leeds, which will be brought forward for development in due course, creating a new mixed-use City Quarters neighbourhood, perhaps of the Martineau Galleries type. But, once again, don’t hold your breath. Nobody, least of all a developer with a deeply damaged rental income stream, is going to risk expensive development anytime soon.
Hammerson are not abandoning retail. They are simply trying to escape from imprisonment in a sector that no longer needs their skills in quite the way it did. Their progress down the workspace, residential and leisure paths will depend on, and be yoked to, their approach to retail property. And this, in turn, will depend on whether the huge capital outlay this plan demands will be forthcoming from shareholders, banks or elsewhere.
So much is uncertain. But what one can say with certainty is that one of the dinosaurs of retail is determined to become a major presence in the wider property market.