Westfield faces a marathon task

By HEATH ASTON
Updated:

 

Only a brave person would bet against Westfield. You don't grow from a single delicatessen in suburban Sydney to become the world's biggest shopping centre empire worth £16bn without knowing your business.

Westfield centre

Hard act to follow: The Westfield centre in Shepherd's Bush.

But the Australian company faces a challenge of Olympic proportions at its latest project, the massive 300-shop indoor shopping mall at Stratford in east London.

Less than two years out from opening and halfway through construction Westfield has so far signed up just three retailers willing to take space at the 1.9m square foot shopping centre adjacent to the Olympic Park.

As the clock ticks, the company faces a hard and potentially very costly battle to lure the 297 more tenants it needs to avoid being branded a white elephant on opening in 2011.

In an interview with the Daily Mail, Westfield's UK chief executive Michael Gutman conceded that in the current economic climate the company had been forced to offer 'incentives' in a bid to get retailers to commit to the Stratford centre, which will be Europe's largest when it opens.

He said: 'There is a combination of rent-free periods and capital reductions that are being discussed but there is a long lead time in this process. It's happening.'

Westfield said in July that it would begin announcing tenants by the end of 2009 but Gutman said that would now not be possible until early next year.

Having signed up Marks & Spencer, John Lewis and Waitrose as 'anchor tenants' on what are believed to be hugely preferential terms, Westfield is focused on signing up what it calls 'major space users' like Boots, HMV and Topshop.

Gutman said: 'At Stratford our view is that there actually won't be enough space to satisfy demand. We believe most retailers at Westfield London (the company's other major project in the capital) are exceeding sales expectations and will want to be involved at Stratford.'

It's a bold call considering that the renovated St David's 2 centre in Cardiff opened last month with just 66% of floor space let. Westfield has also put on hold developments in Bradford and Nottingham.

Westfield London at Shepherd's Bush, which signed up retailers during far sunnier economic days, opened a year ago with 99% of all shop space occupied in the main centre.

The company may have proved its ability to fill its centres but very few retailers are willing to pay anything like the rent they are forced to over the other side of London this time round, according to those who spoke to the Daily Mail.

Retail guru Sir Philip Green is believed to be one prospective tenant wanting special terms to get him to commit stores like Topshop, Burton and Miss Selfridge to Stratford. Gutman said that retailers needed to understand the potential customer catchment that Stratford represents, with 4.1m people living within 45 minutes of the centre spending an estimated £3.24bn a year.

He said: 'The east side of London has more people than the west with slightly less spending power but less competition for their custom.'

The 2012 Olympics is also delivering the type of public transport infrastructure to the area that a developer can only dream of. Stratford will have international rail links by the time the Games begin is also planned to be on the long-awaited Crossrail route

An aerial picture of the site shows why Gutman and his team are so excited about the month of the Games and the sporting events that will follow in the years to come.

Westfield Stratford stands between the train station and Stratford underground station and the Olympic stadium.

Westfield, which would expect to get about 100,000 shoppers a day through the door on a busy weekend believes that up to 300,000 sports fans will pass through during the months of the Games and most will want to spend.

The Olympics is likely to provide a sprint start for Westfield Stratford. But Gutman and his team's success will be measured over the long run.

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