Publications > Commons Select Committees > Communities and Local Government > Communities and Local Government
Session 2010-12: Regeneration: Regen 73
Written submission from Hammerson plc:
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Hammerson PLC
"Hammerson has been creating and managing some of the most exciting retail destinations and office buildings in Europe for over 60 years. A FTSE 100 company with a real estate portfolio in the UK and France of around £5.3 billion at 31 December 2010, Hammerson has investments in 17 major shopping centres and 17 retail parks. We own seven London office buildings, which provide 158,000 m² of prime accommodation. [2013: Not now, you don't ]
"Hammerson aims to be the best owner-manager and developer of retail and office property in the UK and France. We focus on prime regional shopping centres and out-of town retail, while exploiting opportunities in the office sector. Our strategy is to outperform through two areas of focus: maximising income growth, and creating a high-quality property portfolio through acquisition, development and asset management. Both areas are underpinned by prudent financial management."
What made you invest in regeneration in more prosperous times?
"Regeneration is an essential component of the growth process. Hammerson's expertise is in the retail and office sectors. Investment purchases generally become too expensive in a good market and therefore when occupier demand is strong in a particular town or City where Hammerson have an interest then it is a logical step to promote rental and capital growth (and day one profit) through the development process."
What is constraining your ability to invest at the present time?
"The fundamentals of the development process are weak at present. For example, in the retail sector - retailers are very selective about where they locate and how much they will pay, which puts huge pressure on a developer to make development appraisals viable - as inevitably, retailers want to pay less rent but in return for more rent free and capital. [sic]Demand for residential space is restrained by the lack of mortgage finance. Grants have disappeared in respect of the provision of affordable housing, and therefore even more pressure on viability. [sic] Availability of bank finance is still a big barrier - not so much for Hammerson - but for businesses wanting to expand, which in turn will ignite the development process.
However Hammerson has spent time re-designing schemes, and making them more efficient and deliverable, i.e. fit for purpose. A big problem also with big regeneration schemes is the long lead-in period, huge upfront costs for planning; land assembly, big infrastructure commitments which undermine cash flow/returns, etc. Until the fundamentals change, relative to demand/finance, and more certainty on planning and costs, we remain in for a long and arduous period." [sic]
Do you think the Government’s current plans will encourage investment in regeneration?
"In principle, the Government's plans will help, and in addition to the previous answer, much will depend on the Local Authority's willingness and commitment to driving through the growth agenda.
There is a danger that the process could be side-tracked by agitators, and that NIMBYS will undermine the process. Therefore, it is key to have strong local leadership in the Local Authority at Leader and Chief Executive Level. [Well, you've got no chance in Barnet, then, have you?]
It is important that processes are simplified, and not made more unwieldy."
Which areas will be most and least attractive for investment under the new arrangements and why?
"In geographical terms this is very difficult to say, until the Government initiatives are in place. The evolution of Local Enterprise Partnerships, Enterprise Zones and Tax Increment Financing (TIF) will be very important in setting up a strong platform for growth. The South East and London will continue to remain dominant, but areas such as the North East will be testing in enabling regeneration to be kick-started. In these areas, the big challenge will be to attract inward investment by presenting more certainty in planning, occupier demand, and delivery terms."
What more could Government do to help?
"I believe that the introduction of TIF will be key to plugging the gap in terms of what is or not a fundable or deliverable scheme in terms of financial returns. Whether the funding is provided by the public or private sector against future rates income, it is very important that the Government give a clear steer, and importantly, formalise the process, in order that regeneration can be kick-started."
Case Study:
Hammerson regeneration projects:
Highcross Leicester and Cabot Circus Bristol 2008
Hammerson regeneration projects:
Highcross Leicester and Cabot Circus Bristol 2008
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| (pic: Leicester Shire Promotions) |
"The two schemes follow the success in 2003 of the ground-breaking Bullring [sic] development in Birmingham, where Hammerson was the development partner. Once again, on Highcross Leicester and on Cabot Circus Bristol, Hammerson’s role as the principal development partner has seen the company forge a new template for city centre regeneration.
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| (Cabot Circus picture: EG Focus) |
"Shaped by exhaustive and far-reaching consultation programmes, both Highcross Leicester and Cabot Circus Bristol have been designed to respond to community and council objectives. During the 18-month consultation programme undertaken for Cabot Circus at the planning stage over 200 individuals, representing 76 organisations, were involved in the process, while public exhibitions about Highcross Leicester generated 90% support for the proposals.
"During the development stages of both projects, extensive information programmes were implemented which included: public open weekends, regular mail outs to residents, visits and talks to community groups, and ambassador tours aimed at local opinion forming stakeholders and the public in general."
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