DROP IN VALUES GIVES PE MALL OWNERS FOOD FOR THOUGHT

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Guy Montague Jones has provided a sobering Analysis in Property Week this week (15.12.2017) of the prospects facing the secondary shopping centre market based on the outcome of an investment sale in Falkirk.

This sector of the market was destined to be a car crash – Private Equity buying debt at a discount to value based on a cyclical play but without proper regard to the trends shaping the retail market. Only this time it’s different. The change is structural and the resulting destruction in value is happening on an unprecedented scale in mid-sized towns across the UK – witness schemes in Wrexham and Rochdale.

It’s simply a demonstration of the basic Economic principles of “Supply and Demand”- and not even the local councils, armed with cheap cash and misplaced civic pride, are able to defy market forces.

However, on an island where land is supposedly in short supply, there must be viable alternative uses. Residential and Social care are obvious choices. Such provision will require clever wholescale re-development and careful planning, but this process cannot commence until those parties with vested interests come to terms with their inevitable fate and values are allowed to be trashed. The sooner this process can begin, the better.

Robert Millington, Partner, Cheetham & Mortimer
21st December 2017