The value of Eldon Square shopping centre has plummeted yet again, it has emerged.
It has been a devastating few years for the Newcastle city centre site, with former majority owner Intu going bust and major tenant Debenhams shutting down its store as the retail industry suffered during the Covid pandemic. And latest estimates now suggest that its troubles are continuing, though it can also be revealed that five leisure operators have made offers for the vacant department store.
The Local Democracy Reporting Service told in 2020 how Newcastle City Council’s 40% stake in Eldon Square had seen more than £50m wiped off its value, falling from £145m to £93m. But a report presented to councillors on Friday reveals that auditors now rate the council’s share at just £29m – five times smaller than it was just a few years ago.
Using Ernst & Young’s valuation, which was taken on March 31 this year and is included in a report to the council’s audit committee this week, the total value of Eldon Square would be roughly £72.5m. The shopping centre’s majority 60% stake is now held by Intu Debenture Plc, which appointed APAM to manage the site after Intu’s collapse.
An APAM quarterly report published on September 21 lists Eldon Square’s value, as of December 2021, as £93.2m. In 2019, before the pandemic hit, its worth was listed as £280.7m – which had been a 13% dip at the time.
That APAM update also confirms that talks are being held with “five leisure and two retail operators to relet the former Debenhams department store”. It states that offers have been received from five leisure firms and that the operator is "exploring interest from other retail and leisure operators", with a feasibility study having been conducted into splitting the massive empty space into three separate units.
APAM says that footfall through Eldon Square in the second quarter of 2022 was 5.6 million and “continues to steadily improve”, though it is still around 30% down on pre-Covid levels, while Bravissimo and Mango are set to open new shops in the centre. The company added that it is assessing the cost of converting the former Topshop unit, another big brand that disappeared during the pandemic, into two smaller shops.
In July, it was suggested that Newcastle City Council could seek to buy Eldon Square outright. Michelle Percy, the council’s director of place, told the audit committee then that the centre’s falling value “does, of course, open up opportunities” but that the decision would be made by the authority’s political leadership. Ms Percy admitted in the summer that the majority shareholder’s vision for the shopping centre “does not quite align with our own” and that city leaders wanted to take a “longer term view” on its future.
A council spokesperson said on Friday: “Eldon Square is controlled by Intu, and following their collapse, now by Intu Debenture Plc. The asset has been impacted by the global structural changes in retail, and despite the strengths of Newcastle as a city, we recognise the asset needs to evolve, so we have made clear recommendations and suggestions to the Intu Debenture Plc, including aligning a mutually acceptable strategy for the future.”
A source from APAM, asset managers on behalf of the owners of Eldon Square Shopping Centre, confirmed that it continues to seek new businesses to take leases for the vacant shops within Eldon Square and has successfully achieved this over the summer, such as the recent letting to international fashion retailer, Mango.
They added: "It is not currently planning to sell Eldon Square.”
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