THE second largest shopping centre in Scotland will be opened in Aberdeen on Thursday as part of a £275 million mixed-use regeneration scheme by Hammerson which has created a 700,000sq ft retail and leisure quarter in the city centre.
The centre is already 85 per cent let and Guy Wells, Hammerson's Union Square development manager, says negotiations are under way with several retailers for the remaining space.
Union Square now moves from what Hammerson calls a development proje
ct to a live operational asset, with no fewer than 56 retailers having signed up for the largest retail development in Aberdeen for over 20 years.
Around 45 of them will be trading by Thursday, with 52 by Christmas. All the top brand names are there plus more that are new to Aberdeen and Scotland, but there's more to Union Square than retail.
A 203-bedroom hotel has already been opened by Jurys Inns, there's a ten-screen cinema, 12 restaurants and cafes and the development includes hugely improved railway station facilities, a first-class bus station, 1,700 car parking spaces and bicycle parking.
There's been no shortage of superlatives and hype in the PR build-up to the opening – one of the largest city centre developments in Scotland, it will attract visitors from the north of Scotland, other parts of the UK and abroad and will help develop Aberdeen as a high-value retail and leisure destination.
The companies involved are all being tight-lipped about the rents being charged. Joint agent CBRE states that rents are confidential and Guy Wells says the Hammerson policy is not to go into detail on specific numbers but says rents are "in line with current market expectations".
In the current climate retailers are able to win hard bargains which can include, says Wells, up to two years rent-free at the outset.
The total rental income will be around £14 million and it is reckoned that the £275 million scheme will have a completed value of £187 million which would mean a loss of £88 million were Hammerson to sell, it but it is a long-term investor in developments throughout the UK and in Paris, and will be in Aberdeen for the duration.
Hammerson started out owning half of the development, having bought it as part of a portfolio in December 2002 from what used to be the Railtrack Group, and it bought the other half in 2006.
Local market operators believe that Hammerson has dished out more than two years rent-free as an incentive – one agent claimed that in some instances it is around seven years plus a handsome contribution to fit-out costs, and that some of the rents will be linked to turnover. The agent added: "I can certainly see it being successful as a leisure centre but as regards the retail prospects I am a bit cynical. It will be busy at the start, but it is in the harbour area and Aberdonians will take a long time to warm to it."
Union Square could be the last of its kind for some time, according to retail expert Tim Appleton. He headed the CBRE retail team in Scotland until setting up Appleton Craig earlier this year, along with Nick Craig who had been a member of his CBRE team in Glasgow.
He said: "I can't see anything like Union Square happening again for some time. There is now a need to focus on working the assets that you already have which is the only way that the banks will play ball at the moment."
