HANNAH MILNE TALKS TO PROPERTY WEEK
HANNAH MILNE TALKS TO PROPERTY WEEK
12 October 2017
Hannah Milne talks to Property Week about Regional Retail and how Rushden Lakes could provide the blueprint for the retail destination of the future.
Retail parks have long been what The Crown Estate’s director of Regional Retail, Hannah Milne, describes as “essentially a car park with a row of sheds”. It’s a model that has worked for decades but at a time when consumers are becoming ever more demanding, they will need more compelling reasons to visit if they are to come back, and spend money, time and time again.
The Crown Estate has recognised that something of a reinvention is needed. And it is taking action. Rushden Lakes, its new retail and leisure destination on the outskirts of Rushden, Northamptonshire, breaks the mould and is, Milne says, a “game-changer” for the out-of-town retail sector.
But what of the rest of its portfolio? And will Rushden Lakes be the first of a new breed of shopping destinations – one that consigns the old distinction between retail parks and shopping centres to the dustbin of history?
In the last six years, The Crown Estate’s regional retail portfolio has nearly doubled in size from £1.2bn to £2.3bn. Central to its success has been the repositioning of its portfolio by buying and investing in prime assets – a strategy it hopes has built resilience into the business at a time of change and uncertainty in the retail sphere.
Much of the change over the past two years has been driven by Milne. She first joined The Crown Estate in 2011 as head of retail asset management for the regional portfolio. Eighteen months later, she became portfolio manager and in July 2015, she was promoted to director of regional.
Previously, Milne was an investment agent at Knight Frank and BNP Paribas, where she had acted for The Crown Estate.
“To come to work for what had been one of my clients was really exciting. It meant that once we’d bought an asset, I could help to really drive it forward, drive up value and take that asset on a whole journey. For me, it was a natural fit.”
She joined The Crown Estate at an exciting time. “It was when the strategy was just emerging to invest in prime retail outside London. The aim was very much to recycle the older assets we had in the portfolio and to really focus on larger, quality retail destinations that were dominant in their respective catchments.”
In a coup for the company, The Crown Estate bought Leicester’s Fosse Park – which at 560,000 sq ft is one of the largest retail parks in the country – for £345.5m in 2014. Built in 1989, Fosse Park has long been a highly successful destination, but it had suffered underinvestment for years.
The Crown Estate spent £12m on refurbishing the shop frontages as part of a phased programme and has attracted a number of new retailers including Primark, Pandora, Office, JD Sports and Superdrug to broaden the retail mix.
“That’s what today’s consumer wants to see and, as a result of our changes, footfall has gone up 15% year on year,” says Milne. “It shows that if you invest in the right way, based on having a really good understanding of the local catchment, you can really improve performance. Fosse Park is a prime example of the type of scheme where we really see value moving forward.”
For The Crown Estate, key to driving value is understanding the needs of the consumer and working in partnership with retailers to create destinations that will thrive in the long term. A prime example is Silverlink Shopping Park in Newcastle, which The Crown Estate recently extended in partnership with Next.
The retailer had outgrown its unit at Silverlink. It wanted a big-ticket home and garden store but that was not possible on the existing park.
“Next knew we owned a site next door,” explains Milne. “It had restricted covenants all over it, but we got planning, took it off Silverlink Shopping Park, re-let its old unit and built a new 56,000 sq ft unit for it and others for home and furniture brands including Wren Kitchens and Sofology.”
It named the new site Silverlink Point. “What we did there shows how closely we work in partnership with our retailers to really drive value at our destinations and create the right offer that suits the needs of our customers. That’s what it’s all about.”
It also looks at each asset individually. “It’s not one-size-fits-all,” says Milne. “We have a tailor- made approach to everything we own – it’s thoughtful and considered.”
Milne says the common traits that all good retail parks share are accessibility and convenience. The aim is for shoppers to have consistently seamless shopping experiences facilitated by free wifi, click & collect and other services. Beyond that, The Crown Estate is focusing on ensuring shoppers have positive experiences in the wider sense, and that includes more leisure on the parks dominated by fashion.
“There should be plenty of different reasons to visit,” says Milne. “Rushden Lakes is a great example of that.”
Future of retail
Rushden Lakes was delivered in partnership with LXB, which The Crown Estate had worked with on Banbury Gateway Shopping Park in 2013. The two companies shared a vision for what Rushden Lakes could become, says Milne. They signed a commercial agreement and acquired the site in April 2015 and launched the first phase of the scheme this summer.
The 230,000 sq ft first phase comprises 41 retail and restaurant units set around a central boulevard. The scheme, which is connected to Rushden town by a footbridge, sits in a country park and is adjacent to a lake and a Wildlife Trust ‘discovery centre’.
“The scheme interlinks with the lake and the natural environment around it,” says Milne. “People come to canoe, they come for bike rides and they come for country walks. When the remaining phases open, there’ll be a cinema, more restaurants, trampolining, golf – a whole range of activities.
“It’s a great example of what the future of retail is likely to be. Obviously nobody can be complacent; retail is going to continue to evolve, but having plenty of reasons to visit is really, really important.”
The scheme is 99% let or in solicitors’ hands two months after opening and it has attracted retailers that have never traded from an out-of-town location before, including House of Fraser, which has chosen Rushden Lakes for its first new store in nine years. Other retailers include M&S, Primark, H&M, Paperchase, Phase Eight and L’Occitane.
“The really interesting piece is that a lot of the retailers that signed up to Rushden Lakes wanted a physical store to grow their online sales. Research shows that 90% of online purchases touch a physical store – it’s a great example of how the physical store and the online shopping journey are complementary.”
Phases two to four, on which work is under way and which are due to complete in 2019, will comprise a further 215,000 sq ft of retail and leisure including a 15-screen Cineworld cinema and restaurants.
The Crown Estate’s decisions – on Rushden Lakes and across the portfolio – are informed by extensive research into each asset’s catchment and shopper surveys. It gets trading information from retailers and it tracks wider retail and societal trends.
“It’s a fast-changing market and we have to be fleet of foot,” says Milne. “In terms of overall trends, we have really got to work hard to gauge what’ll happen in the future and react accordingly. It’s important to wait until the time’s right to implement these things.”
She says it is looking at artificial intelligence, the ‘Internet of Things’, and driverless cars, among other technologies. “It’s too early to be talking about exactly how the design [of retail parks] will change as a result of driverless cars but it’s very much on our horizon. What we do know is that car parks might change and we might be able to use that land in a different way.”
Milne acknowledges that retail is a challenging sector in which to operate, not least because of the pace of change, but she is positive about the future.
She points out that The Crown Estate has collated a prime portfolio that has a consistently low void rate of 2%. “We think we’re really in great shape now,” she says. “Moving forward, we’ll continue to invest in our existing schemes but also we’re very much there to buy and build the right schemes at the right time, depending on where we are in the market cycle and where we see opportunities to take schemes forward.”
After years spent repositioning its portfolio and bringing new schemes to market, The Crown Estate’s commitment is clear. The question now is whether Rushden Lakes is the blueprint for the out-of-town retail and leisure destination of the future.