The acquisition of the Houndshill Shopping Centre earlier this month was a bold move by Blackpool Council – but the local authority is by no means unusual in taking a stake in the high street.
Between 2016 and 2018, 26 shopping centres were bought by different councils around the country within their borough.
The Knightswick shopping centre on Canvey Island was bought by its local council for £11m just last month.
By comparison prior to 2016 there were only four recorded instances of local authorities buying shopping centres, according to commercial property consultant Frank Knight.
So Blackpool Council joined the likes of Canterbury, Stockport, Shrewsbury and Bolton in investing in a shopping mall when it bought Houndshill for £47.6m at the start of November.
With commercial values plummeting (Houndshill’s previous owner had paid £105m for it in 2015) and less confidence in the retail sector, it is perhaps not suprising councils are the only potential buyers in many cases.
They can borrow at low rates and need strong shopping centres to underpin wider regeneration plans in their towns.
This is certainly the case in Blackpool where millions of pounds is currently being ploughed into both private and public ventures in the town centre ranging from the tramway to new hotels and a conference centre.
And according to analysts it is a wise move.
Writing in 2018, Mark Smith, a specialist in retail investment with Frank Knight, said local authorities could benefit in a number of ways from securing the future of their local shopping centre.
These include improving the environment of the town centre, generating employment, sustaining or growing revenue from commercial rates, encouraging third party investment and taking control of town centre regeneration.
He adds: “Aside from the need to ‘take control’ of what is probably the
local area’s largest and most important commercial asset, there is also a sound financial case behind LAs (local authorities) acquiring shopping centres.
“It should not be overlooked what an incredible opportunity is being presented to these buyers with lending rates of one per cent or lower.”
Blackpool Council has already shown its hand in terms of its future ambitions by borrowing a further £22m to fund the second phase of Houndshill which includes a new Wilko store and cinema.
Paul Crossley, managing director of Blackpool commercial estates agents Kenricks, believes it is a good decision by the council to buy Houndshill.
He said: “It’s in their interests for Blackpool to do well.
“Providing they are sustainable with the rents, people will want to come in.”
Elsewhere in the town centre, he says landlords are having to come to terms with getting lower rents for their properties – where once a unit might yield £90,000 a year, now it is more likely to be in the region of £30,000.
Mr Crossley added: “Landlords have to start being more realistic because the market has changed.
“When they do accept they are no longer going to get the heady heights of the past, we are always able to lease the premises.
“I think retail is still strong, but more services such as hair and beauty salons and nail bars are now coming in.
“There is investment happening in the town centre with new hotels etc being built, and hopefully that will mean more people coming to the resort and it’s more footfall that we need.”
As well as meeting demand from residents, shopping is also seen as an important part of Blackpool’s tourism offer.
Ian White, owner of The Chorlton Hotel on Hull Road and a director of hoteliers group StayBlackpool, said: “The news that Blackpool Council has bought the Houndshill Centre is of real significance
“As a local hotelier, just a stones throw away, most of our guests will regularly use their visit to shop, whether here for events, family breaks or just some seasonal shopping.
“The purchase price allows for funds to be raised to complete further development which is a bonus.
“For too long the town has been waiting for all the planned developments, including the Imax-style cinema, Wilkinson’s and added eateries.
“These are exciting times for the town with a real potential to strengthen the Houndshill’s popularity, the evening economy, attract more brand names and so much more.”