Shrewsbury shopping centres make more money for council than bank investments would have
Shrewsbury's council-owned shopping centres made more income than bank or building society investments would have done, councillors have been told.
New and renewed tenants will also help “ride out” last year’s drop in their value, they heard.
Shropshire Council’s head of economic growth, Gemma Davies, said the Darwin Centre saw a five per cent drop in visitors in December, compared to 6.7 per cent nationally, and will see a Skechers shoe shop open soon.
Pride Hill Centre’s footfall dropped by 12.7 per cent, and Ms Davies said the closure of Next “had an impact on that”. She also told the place overview committee that the Riverside Centre could be converted into homes.
Purchased by Shropshire Council for £53 million in 2018, the centres were revalued at £11.5m less the following year.
But finance chief James Walton said they had made £2.7m - while investing the same amount in financial institutions would have made around £500,000.
Refurbishment to the Darwin Centre will begin in April and last until the summer, Ms Davies told the committee.
“This is to bring the mid-level mall up to modern standards,” she said.
“It includes completely refurbished customer toilets, lighting, flooring etc.
“Good news for Darwin is that we have a new retailer committed and fitting out, Skechers shoes.”
Several existing stores had renewed their leases, she added, but the Disney Store is due to close on January 25.
“This was expected. What they do nationally is take short-term lets essentially to get through Christmases," said Ms Davies.
At Pride Hill, she said, “footfall has been impacted by the closure of Next”.
Nationally, high street footfall for December 2019 was 6.7 per cent lower than the previous year.
“Within the Shrewsbury area, it was 5.1 per cent down,” Ms Davies said.
“Clearly that’s still down, but compared to the average, Shrewsbury is still performing better.
“Darwin was slightly better than that, five per cent down. Pride Hill was 12.6, so I think you can see the impact vacancies in Pride Hill are having.”
Committee member Nick Bardsley asked: “Is any element of the Riverside redevelopment going to be residential?”
Ms Davies said: “When we acquired the Riverside we were quite clear we didn’t see its future in retail.
“There will be a range of uses considered. Residential will be one of them and with that will be the question of how to make use of the river frontage.”
Committee chairman Joyce Barrow asked about the financial position of the centres.
Finance chief James Walton said the council has generated £2.7m of income.
“That’s more than five per cent of the initial investment, £53m,” he said.
“The shopping centres were bought for an economic regeneration purpose, and using cash in the council’s account that would have otherwise been invested in banks and building societies and would otherwise have made a return of 0.8 or 0.9 per cent.
“However, we have to take into account the fact that the value of the shopping centres has fallen.
“Providing we don’t decide to sell them, we can ride that out.
“With the investment Gemma has talked about, we would expect the value to increase so that would protect the capital value, should we decide to sell in the future.”