Clock ticks on Broadmarsh

For some time now, there’s been very little in the way of news about Capital Shopping Centres’ intentions towards Nottingham.
You’ll recall that the owner of the Victoria Centre shocked nearly everyone in town when it pulled off a late night deal back in November to buy the rival Broadmarsh Centre from Westfield.
The shock came not just from the fact that no one locally had any inkling that the bombshell was about to drop, but also because it called into question whether an decrepit 1960s eyesore was ever going to be dragged into the 21st century.
Those fears may be well-placed.
CSC has kept its counsel in recent weeks, officially because it was waiting to find out whether the Office of Fair Trading - which had decided to cast its eye over a deal which handed over an entire city to one operator – thought the purchase merited intervention on competition grounds.
The OFT told me upfront that it had been its own decision to examine the acquisition because it routinely looks out for major transactions of this kind. Perhaps; but rumours suggest the OFT may have been economical with the truth there, and that what we’ll call a prominent industry institution had been whispering in its ear.
Even more intriguing was a statement buried away in CSC’s annual results last week, which said it was “optimistic” about Nottingham’s retail potential provided there was a “pragmatic approach” from Nottingham City Council, the planning authority.
Put that together with a statement elsewhere in the results where it talks about “complementary redevelopment” in Nottingham and what have you got?
Pretty clear evidence that CSC wants to plough serious money into the Victoria Centre, not Broadmarsh.
How come? Suggesting optimism about Nottingham’s retail potential, rather than the new asset it’s just bought (Broadmarsh), tells me it thinks the immediate potential is in its existing asset, the Victoria Centre. Remember that this has a book value of £333m, while CSC says Broadmarsh has a book value of only £65m. This is not only less than the Vic Centre, but £8m less than it paid for it only four months ago.
The giveaway is surely the use of the term “pragmatic”. While it never said so publicly, the City Council was desperate for Westfield to go ahead with an ambitious redevelopment of Broadmarsh because it would have replaced Berlin Wall-standard concrete blight with a new gateway to the city centre.
CSC presumably believes a pragmatist would realise that it is unrealistic to expect the owner of a £333m shopping centre to spend disproportionate fortunes bringing the ugly sister down the road up to the same standard. After all, what would that do to the asset value of the Vic Centre?
The whole point of CSC’s purchase of Broadmarsh was to take out the competition.
The prospect of Broadmarsh being left to fester as a relic full of cheap retailers is one which will appal some people inside the City Council. They had been looking for a commercial partner who, in return for wholehearted support, would invest in development which dovetailed with the long-term strategy for the city centre.
A “shed half way up Mansfield Road” (as the Victoria Centre expansion plan was described to me privately) doesn’t tick that box, and may drastically tip the commercial centre of gravity away from a Southside quarter which is, in every sense, front and centre of City Council thinking.
When the City Council next gets round the table with CSC it still has a couple of cards left in its deck. One is its ownership of land near the Victoria Centre which CSC theoretically needs to allow expansion there.
The other is a ticking clock. A number of upmarket retailers had been ready to sign deals for units in the first stage of the (now abandoned) Broadmarsh redevelopment. They have already been waiting a long time to come to Nottingham. Will they continue to kick their heels if CSC gets involved in a drawn-out battle about the Vic Centre with city planners?
Or will they go elsewhere in the city centre instead?