Eldon Garden Shopping Centre has been put up for sale by its owners with a £4.95m price tag - and already has a number of interested parties keen to take it on.
The Newcastle city centre mall has been put up for sale by London-based Peer Group, 22 years after it took over the complex which joins onto Eldon Square. The company has invested millions of pounds into the property over the years which, at its peak, was an upmarket destination full of aspirational brands, cafes and boutiques.
Recent years has seen the number of tenants inside the centre plummet to just a handful of operators, however, and now Peer Group has enlisted property agents Reid Birkett and Sanderson Weatherall to find new owners for the centre. Eldon Garden has 47 retail units in all, but most in the interior section are empty. Tenants in the Percy Street part of the scheme - including Tesco, The Goose pub, Hunters Estate Agents, Mode Hairdressing and Pure Gym - account for almost 80% of the £615,162 a year income.
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Peer Group said that the firm’s net income from Eldon Garden is essentially zero, with the tenants’ rents just about covering the centre’s service charges. The group’s moves to offload the 80,000sqft centre follow crisis talks Newcastle City Council five years ago, with the owners criticising traffic issues and parking charges for the centre’s decline.
Property director Jonathan Dean said: “Up until the pandemic we were working on the ‘try-before-you-buy’ approach and we were getting traction. We were, without doubt, knocked for six by the pandemic. That happened across the board with all retail locations but especially shopping centres because they are covered schemes. It was the out of town schemes that, with the bounce back, benefited more. We had to review our position. Peer Group has owned Eldon Garden since 2001 and the decision was made by our board for a new investor to write the next chapter.”
Managing director Howard Dawson said: “We have given it our all since 2001 to turn it into a shopping centre that worked. It’s a shopping centre of two halves - the outside bit with Tesco, Pure Gym and The Goose pub representing quite a significant and secure income from traders trading extremely well. Unfortunately, from an owner’s point of view, the income derived from the good parts of the centre just about cover the shortfall of service charge. Our overall equation has seen our net income eroded to little more than zero in truth.
“It’s a long way from London for us to manage in terms of people resource and it needs a completely fresh approach. We expect that there will be some degree of new use applied to parts of Eldon Garden shopping centre going forward. That’s going to require physical change to some of the buildings. That will require long term discussion with Newcastle City Council - the car park could come into play, for example.
“It will certainly require quite significant capital investment to create that new opportunity - and because it’s so far from London in terms of people resource, and capital resource involved, we felt it wasn’t for Peer Group.”
Mr Dean said local investors are now keen to carry ideas forward and he expects a deal to be agreed within six to nine months.
He said: “We’ve had four or five strong parties come forward. We always felt it would come from a regional investor with that local knowledge and that’s definitely been the case. There are investors there in the North East who can see an opportunity here and have the skills to deliver. The ones we have spoken to have experience in the retail sector but other sectors as well.
“We believe it’s likely to be a hybrid scheme that comes out of this and some of the interest in the past has been more on leisure that retail - we’ve always expected that as retail evolved it’s about a more experiential approach and there maybe other uses as well.”
Mr Dawson added: “All those we have spoken to recognise the importance of partnering with Newcastle City Council for the future - and the council have been supportive of us taking this step. They are open-minded about the parties we are talking to, and have indicated their willingness to work with a purchaser for what’s best for Eldon Gardens. It’s in their interest to see the centre put to good economic use.”
A council spokesperson said: “We are aware that the owners of Eldon Garden shopping mall have put it up for sale. Being in the heart of the city centre it is an important development, and we would hope that any future use is complimentary to the wider Eldon Square shopping centre.”
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