Home Commercial Property Westfield Stratford City: Will Europe’s newest, biggest supermall return its £1.4bn investment?

Westfield Stratford City: Will Europe’s newest, biggest supermall return its £1.4bn investment?

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13th Sep 11 9:00 am

It opens today, respelendent with 300 stores, a bowling alley and casino. But can it do what developers promise?

Westfield Straford City

Supermalls tend to get a bad press from the East End arty crowd. They’re billed as vampires of local business diversity, sucking custom from treasured independents.

There’s some irony, then, that Westfield Stratford City is being opened right on East-Enders’ doorsteps today, courtesy of a launch ceremony graced by Pixie Geldof and Kelly Brook. All 1.9 million square foot of it. That’s about 23 football pitches, for you non property developers.

Westfield Stratford City in numbers:

  • 1.9 million square feet
  • It features a bowling alley, hotel and the UK’s largest casino
  • 70 per cent of Olympic visitors will walk through the mall on their way to the Games
  • More than 300 shops, including Apple, Prada, Nike, Topshop
  • 14-screen cinema
  • 4.1 million catchment population
  • 24-hour lifestyle street linking the Stratford international and regional stations

But this monster of a shopping centre – the biggest in Europe once it’s finished – is hardly the evil beast some fear.

For a start, it’s creating 18,000 permanent jobs. It provided 25,000 people with work during construction alone.

Its 300 stores will create a frenzy of footfall in the area. Next summer, footfall will be supercharged by 10 million expected Olympic visitors, 70 per cent of whom will pass through the three-level, glassy precinct on their way to the Games.

Westfield Straford City

Westfield Stratford City (artist’s impression). Later today we’ll be bringing you first look video footage of the supermall.

All those extra people will benefit Stratford, and the wider East London area. A good chunk of those visitors will spend their cash elsewhere in Stratford, outside the shopping centre – as seems to be happening in Shepherd’s Bush with the Westfield London there.

The other Westfield: what Shepherd’s Bushians think

The Westfield London (of West London) received 26 million visitors in 2010 for its 265 stores and slightly smaller 1.6 million square feet. We can look to it for something of a template of how the newest addition to the Westfield family could develop.

I talk to a couple of non-Westfield small retailers in Shepherd’s Bush, and I’m surprised at how enthusiastic they are about the effect of their supersized neighbour – contrary to a widespread belief that big shopping centres divert business away from smaller local stores.

“The whole area has benefitted,” fizzes Raj Grewal, who has been managing footwear retailer Stuart’s London since 1987.

“Since Westfield opened there’s been a new influx of young people moving here who work in the city. It’s regenerated the area – the bars and clubs are bubbling and lively. There are lots of nice new restaurants, and other businesses are growing as well.”

Grewal says the “clean-up” Westfield inspired, from physical appearance of the area to better policing that got rid of “bad people who wanted to do ‘business’ here”, has all helped.

Yu Gun, manager of restaurant Bamboo, agrees: “There’s good infrastructure now, and it’s brought in people who are definitely good for business.” Although, he points out, parking in the area is now a nightmare.

Westfield Straford City

Inside Westfield Stratford City (artist’s impression). Later today we’ll be bringing you first look video footage of the supermall.

Westfield Stratford City: the social benefits

The combined wallets of Westfield Stratford City’s 4.1 million catchment population amount to a heck of a lot of spending power. At least a slice of that money will spill out into smaller businesses outside the supermall in the same way.

Property companies building supermalls are also legally bound to invest in the target community they develop in, thanks to a nifty little bit of legislation known as Section 106.

“Typically, investments could go towards school or a hospital or roads or parks,” explains Edward Cooke, executive director at the British Council of Shopping Centres (BCSC). “And we’re talking tens, if not hundreds of millions of pounds.”

So far, Westfield Stratford City has announced two initiatives providing retail training and job-matching services for Newham locals: Workplace (co-funded with Newham Council) and Skills Place (helping the long-term unemployed).

Which is nice. Those feel-good, non-profit measures won’t particularly salve the £1.4bn bill developers have coughed up for Westfield Stratford City.

Not to say the investment won’t pay off.

Why London is worth the £1.4bn shopping bill

London is the greatest golden goose of global shopping capitals, pipping New York, Paris and Tokyo with its £62bn in retail sales in 2010. So it’s no great wonder that 95 per cent of Westfield Straford City’s retail space has already been let to the likes of Nike, Prada, New Look, Mulberry and Apple.

BCSC’s Cooke explains the attractiveness of London for retail investment: “London consumers feel more secure in their jobs than elsewhere in the UK, due to more positive growth in the city and less reliance on public sector jobs, which are being cut.”

The exchange rate lures in foreign visitors too. The value they bring to the UK is expected to grow by 60 per cent in real terms over the next decade, according to Deloitte. Cooke says it’s not just the Chinese and Russians spending in London either – “Nigerian spend is up 52 per cent on last year.”

Supermalls in London are to some extent cotton-woolled from the economic volatility the UK faces. “It’s not immune, but London is protected from big peaks and troughs in wider economy, because it’s got a more diversified economy than other places.”

In spite of what supermall-haters might opine, the mix of gargantuan and mini retailers is precisely what makes London’s ecosystem robust.

  • LATER TODAY: We’ll be bringing you first look video footage of Westfield Stratford City – keep your eyes on our homepage

As Sarah Coley from the British Retail Consortium explains: “A successful retail sector depends on a good mix – the large shopping malls and smaller local shops. We think there’s room for everybody to be successful because shoppers do want different experience at different times, depending on what they’re buying.”

There’s even something of a co-dependency between big malls and local shops on the high street, because combined they are able to draw in customers who want that diversity.

“The caveat is that if you have a shopping centre by or in a town centre – and London is effectively lots of small town centres – no one will come to the high street because the provision of shops is inferior, the car parking’s too expensive, and so on,” warns Cooke.

And it wouldn’t be too surprising if the recognisable brands currently drawing customers to
Stratford’s main shopping streets gradually move inside the safety of Westfield. Management of retail units in supermalls is typically far better than the smaller organisations that lease single high street premises.

For Stratford, it’ll all come down to how effectively Australian property developer Westfield and Newham Council can work together to regenerate the area, without damaging existing local businesses. And how they handle the flush of money that’s bound to flood the area in the coming years.

Westfield London (that’s the Shepherd Bush one) took almost 20 years to get plans approved. Westfield Stratford City was in the pipeline before the UK was even considering its Olympic bid. So it’s unlikely we’ll see another London supermall popping up anytime soon.

But if this goliath turns out to be the East London white knight that Newham Council and Boris Johnson are hoping for, it might just do the trick for now.

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