The BBC on ‘The councils trying to save the High Street’ in 2018

Local councils have spent more than £800m on the purchase of UK shopping centres over the last three years.

BBC News writes:

In many struggling town centres, these big properties have become something of an unloved asset by investors. Buyers are thin on the ground. But councils have been stepping in and acquiring them. According to the commercial property consultancy Knight Frank, since 2016, councils have snapped up 26 shopping malls – 10 this year alone.

‘As traditional buyers have shied away from retail, councils have picked up their activity to become the most active single group buying shopping centres, with nearly one in every three that has sold in 2018 being acquired by a council, within their boroughs,’ says Mark Smith, a partner at the firm. ‘Their activity has been spread across England, with the uniting factor being the desire to effect change.’

Bolton Council is one of them. It spent more than £14m this year to gain control of Crompton Place, a 1960s-style shopping centre along with its car park covering more than 280,000 sq ft. ‘It was a big button to press, but I think it’s money well spent,’ says Councillor Ebrahim Adia, Deputy Leader of Bolton Borough Council…

Crompton Place has seen better days. There’s an empty BHS at the main entrance. New Look recently moved to a new location and the gaps are getting harder to fill. The council has now lined up a private consortium to completely redevelop the site. It plans to broaden its use, reducing the number of shops and putting in place residential and leisure units…

So where’s the money coming from? ‘Un-quantified risk’ The council isn’t using council tax or money from existing budgets, which have already been slashed by some £155m over the last seven years. It’s borrowed the money. Like other authorities, it’s able to secure loans at far cheaper rates…

Councils have been pouring record amounts of money into all sorts of commercial property, to generate new sources of income to help fund services…

The Chartered Institute of Public Finance and Accountancy says councils shouldn’t expose public funds to ‘unnecessary or un-quantified risk’. Bolton Council says it’s confident it will get its money back on the shopping centre and that it’s got a good deal…

Record low: Figures from the real estate investment data provider, MSCI, reveal there’s been a fall in shopping centre property values of 7.9% since 2015…

Wigan Council bought the struggling Galleries Shopping Centre for £8m in March, more than 90% less than it was worth in 2006 when it was traded for £83m…

Surrey Heath Council has been one of the most active buyers. It spent £86m on Camberley’s main shopping centre. It then went on to spend £17.6m buying the freehold for House of Fraser next door, 18 months before it collapsed into administration…

‘Clearly there’s always a risk and if councils are buying cheap property to try to make a quick profit, that’s not the right motivation,’ says Mark Williams, president of Revo, the retail property body…

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