Frasers Group’s acquisition of the Frenchgate shopping centre highlights a strategic move towards expanding its real estate portfolio. The recent purchase marks the retail giant’s third investment in shopping centres, signalling a trend towards retailer landlords. Such acquisitions offer value through brand leverage. Ikea’s similar strategy provides insight into this evolving market. These developments indicate a shift in retail property dynamics.
On 2 July, Frasers Group announced the acquisition of the 770,000 sq ft Frenchgate shopping centre in Doncaster. This purchase is part of the group’s ongoing strategy to expand its real estate holdings across the UK. Although the group did not disclose the exact purchase price, Frenchgate was listed for £35 million on LoopNet in March 2023. This marks Frasers Group’s third acquisition of a shopping centre, following previous purchases of The Mall in Luton for £58 million and Overgate in Dundee for approximately £30 million last March.
According to property insiders, the primary motivation behind these acquisitions is the significant decrease in property prices. Knight Frank estimates that shopping centre prices have fallen by 60%-90% between 2015 and 2023. Frasers Group plans to leverage its brands, including Sports Direct, House of Fraser, and Flannels, to enhance the value of these properties. By anchoring these centres with its popular brands, Frasers aims to revitalise the areas and attract other retailers. Mike Ashley, a notable figure in property investments, has a history of acquiring retail properties to boost their value.
The Doncaster deal represents a strategic opportunity for Frasers Group to unlock new potential for its brands. Frasers plans to triple the size of its Sports Direct store in the centre, expanding it to over 35,000 sq ft to include USC, Game, and Evans Cycles. This approach aligns with the group’s long-standing strategy of purchasing distressed retail properties, revitalising them, and eventually selling them for a profit. Previous acquisitions include 31 DW Sports stores in 2020 and 20 JJB Sports sites in 2012.
Ikea’s approach mirrors this trend, as seen with its acquisition of the Churchill Square shopping centre in Brighton for an estimated £145 million. The Scandinavian retailer is opening a small-format city store in the former Debenhams unit, continuing its investment in high street locations. In 2021, Ikea rebranded the Kings Mall shopping centre in Hammersmith to Livat Hammersmith, marking its first small-format store in the UK. Experts suggest that such moves by Frasers and Ikea are likely to enhance the value of these centres, increasing foot traffic and rental income.
Property sources believe these investments are beneficial for regional town centres that often require redevelopment. Cindy Andersen of Ingka Centres highlighted that the Hammersmith project demonstrated the viability and future potential of traditional shopping centres when adapted to meet local needs. Michael Murray, CEO of Frasers Group, expressed a strong commitment to revamping the high street experience, ensuring that retail spaces deliver top-tier brands and customer experiences.
The strategic acquisitions by Frasers Group and Ikea underscore a transformative shift in retail property investment, offering a glimpse of the future of high street revitalisation.
