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Wednesday, 15 November, 2000, 20:48 GMT
E-tail growth hits out-of-town stores
New Scotland Yard
New Scotland Yard: In the Land Securities portfolio
The growth of internet shopping is hitting the value of out-of-town retail centres, according to the UK's largest listed property firm.

It is the middle area of retail which is being the worst hit

Ian Henderson Land Securities
Land Securities, developer of sites including Birmingham's Bull Ring and Bristol's Broadmead, on Wednesday blamed e-commerce for aiding a 2% decline in the value of its 1.37bn shopping centre portfolio.

The internet is, by enabling easy comparisons between different outlets, deterring retailers from increasing prices, and so squeezing margins, the firm's chief executive Ian Henderson said.

"What you are finding is that the branded names are not so badly affected, because people will still be prepared to pay for them," Mr Henderson told BBC News Online.

"Discount stores are also not so badly affected. It is the middle area of retail which is being the worst hit."

Company revamp

The firm credited a strategy imposed in May of improving revenue, and selling assets which could not be further developed, for preventing a greater decline in the value of retail assets.

"The relatively small adverse movement in value... shows the success we have had in implementing our rationalisation policy," the firm said in its results statement for the six months to the end of September.

Shopping sites outside prime areas were being worst hit as retailers "rationalise their space requirements", the statement said.

Shopping centres 'will survive'

But Mr Henderson did not foresee the slide heralding the end of the out-of-town shopping centre.

People will still be prepared to travel to shop - to get choice, value for money

Ian Henderson
"People will still be prepared to travel to shop - to get choice, value for money," he told BBC News Online.

"But what people will also want to do is be able to pop round the corner, to pay for convenience."

The firm's investment in city centre developments, typically containing retail and office units, aims to exploit this trend, he said.

Huge portfolio

The value of the company's overall property holdings rose 7% year-on-year to 7.73bn, with growth in the London portfolios, including New Scotland Yard and much of Oxford Street, more than offsetting the squeeze on shopping centre sites.

But while rental income rose slightly to 243m, costs including 97.2m development spending saw pre-tax profits decline 2% to 148.5m for the six months.

The firm will, within the next few months, discover whether it has, with partners, won contracts to run London Underground and BBC property portfolios.

Shares in Land Securities closed 11.5 pence higher at 782.5p in London on Wednesday, valuing the firm at less than two-thirds of its property holdings.

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