Discounted sale of Bristol's Galleries mall shows property sector weakness
The difficult situation the UK retail sector finds itself in has been summed up by the £32 million sale of The Galleries mall in Bristol that’s being acquired by fund manager La Salle Investment Management. It’s being sold by InfraRed Capital and is believed to have cost it £50 million just eight yers ago, according to the Sunday Times.
Its gradual decline has been part of an overall trend that has seen giant supermalls being the winners as they have the clout to attract big names and enhanced footfall, while smaller malls struggle to sign up new tenants.
Retailers at the centre include Bonmarché, Claire’s, Edinburgh Woollen Mill (EWM), Jack Wills, Pavers, Peacocks and Yours with a heavy weighting towards value priced fashion stores.
The Galleries has suffered since the opening of the more upscale Cabot Circus that launched in the city centre 11 years ago. Cabot Circus has announced a number of big name signings in recent periods, as well as existing tenants upsizing their stores as they invest heavily in their most successful locations.
The value of retail properties is under pressure as footfall continues to drop and as a number of retailers try to exit onerous leases and the sale of this one for such a low price is clearly of concern to property investors. The shares of both Hammerson and Intu fell on Monday.
It will be interesting to see whether the Bonmarché store survives at The Galleries given that the firm’s new majority owner, Philip Day’s holding company Spectre, also operates Peacocks and EWM stores at the location.
The mall does have redevelopment potential and planning permission is already in place for co-working and residential space. But with such a project estimated to cost around £60 million, InfraRed clearly saw better opportunities elsewhere.
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