North East Retail and Leisure Study One North East

February 2011

DTZ 23 Park Square South Leeds LS1 2ND Tel: 0113 246 1161 Fax: 0113 244 1637

Contents

Page

1.0 INTRODUCTION ...... 1

2.0 REGIONAL TOWN CENTRE CONTEXT ...... 5

3.0 EMERGING TOWN CENTRE TRENDS ...... 11

4.0 POLICY DRIVERS ...... 28

5.0 RETAIL CAPACITY MODELLING ...... 34

6.0 LEISURE ANALYSIS ...... 57

7.0 THE HEALTH CHECKS ...... 77

8.0 STRATEGY RECOMMENDATIONS ...... 98

Appendices

Appendix 1: Catchment Area Map Appendix 2: Results of Household Interview Survey Appendix 3: RECAP Retail Capacity Forecasting Model Appendix 4: Health Check Report

Quality Assurance Record

Checked By: Janet Entwistle

Date: 12 January 2011

Authorised By: Stephen Miles

Date: 12 January 2011

Ref:

Disclaimer and confidentiality clause

This report should not be relied upon as a basis for entering into transactions without seeking specific, qualified, professional advice. Whilst facts have been rigorously checked, DTZ Debenham Tie Leung can take no responsibility for any damage or loss suffered as a result of any inadvertent inaccuracy within this report. Information contained herein should not, in whole or part, be published, reproduced or referred to without prior approval. Any such reproduction should be credited to DTZ.

1.0 Introduction Purpose and Scope

1.1 DTZ has been appointed by One North East (ONE) to undertake a study of the retail and leisure market in the North East. The study, commissioned in January 2010, was originally intended to inform the proposed integrated Regional Strategy. As a result of proposed changes to regional planning under the Coalition Government, its purpose has changed slightly although the scope of the assignment has remained as set out in the original study brief. It provides an up to date source of evidence for local planning authorities in the North East, to help them make strategic decisions about the future of retail and leisure development, and to harness the potential of retail and leisure to support sustainable economic growth.

1.2 Specifically, it is expected that the study will be used to:

 Provide a consistent data set for the entire region regarding future retail and leisure needs to address the mismatches between studies at local level

 Provide an independent perspective on the deliverability of floor space in key centres

 Enable conflicts across local authority boundaries to be addressed in respect of the delivery of large scale retail developments

 Provide a comparative analysis to examine the performance of centres and identify those areas where there are gaps or needs for provision

 Provide added value to local level studies to act as a benchmark against which such studies can be sense-checked

 Make ―strategic‖ policy recommendations regarding retail and leisure provision for local authorities to consider as part of their LDF processes and for other parties at the local or sub regional level.

1.3 There are four key strands to the work:

 Review of trends in retail and leisure – collection and interpretation of evidence relating to the performance and emerging trends in respect of retail and leisure sectors and how they are impacting on town centres in the North East

 Quantitative analysis and forecasting of future retail capacity in comparison goods retailing for the region over a 20 year period

 Qualitative analysis – assessing the performance and capacity of many of the region‘s key town centres and highlighting gaps and opportunities in those centres to which future policy may respond

 Identification of spatial policy implications – recommendations arising from the research for consideration at the local level.

1.4 It is important to stress that this study is a strategic exercise and that the results should not be used as a substitute for detailed retail studies at the local level. Nor should the results be used as the sole evidence in determining planning applications. The recommendations are strategic in nature and as such are concerned with matters that have inter-local authority

significance. Methodology

1.5 The study has been approached in accordance with the four work-streams highlighted above:

Stage 1 Review of National and Regional Trends in Retailing and Leisure

1.6 We have carried out a comprehensive desk based review which has focused on:

 Examining the context to retail and leisure provision in the North East including assessing the network and hierarchy of centres in the region and key performance indicators for the largest centres

 Emerging national trends in the retail and leisure sectors and how they are likely to impact on future development in the region

 Key policy drivers, including the changing emphasis of policy since the Coalition Government was elected.

Stage 2 Quantitative Analysis and Forecasting

1.7 In agreement with One North East, we have prepared retail forecasts for 15 town centres in the region over a 20 year period from 2010. The criteria for selecting the centres was informed by the Venuescore ranking of every centre in the region. This identified nine regional centres: i.e. the 9 centres ranking most highly. A further 6 major district centres. were selected as case studies. The latter do not necessarily represent the most highly ranked such centres in the region (although most are), but were also selected to represent a geographical spread throughout the region. Their selection was also informed by other factors such as potential future changes to the catchment population or regeneration proposals.

9 major regional centres

 Newcastle

 MetroCentre

 Middlesbrough

 Darlington

 Sunderland

 Durham

 Stockton-on-Tees

 Redcar

 Hartlepool

6 Major District Centre Case Studies

 South Shields

 Washington

 Bishop Auckland

 Ashington

 Peterlee

 Berwick-upon-Tweed

1.8 We have also prepared retail forecasts for two groups of out-of-centre retail parks and superstores: those in and north of the City of Durham (including Tyneside and areas further north), and those to the south including Teesside, Darlington, Hartlepool and south Durham.

1.9 For the retail forecasting in this report, we have used our RECAP retail capacity forecasting Model, as we now use for all such retail studies. The RECAP Model is an empirical ‗step by step‘ model, based on the results of recent household interview surveys of shopping patterns in the region, as its method of allocating retail expenditure from catchment zones to shopping destinations. It is therefore not a theoretical gravity model, but is based on consumer responses about actual shopping patterns. It is also a growth allocation model; which allocates growth in expenditure to shopping destinations based on shopping patterns indicated by the household interview surveys, and informed professional judgements about how these will be likely to change in the future as a result of potential new retail developments.

Stage 3: Qualitative Assessment – Health Checks

1.10 For the qualitative assessment, we have carried out health checks in accordance with PPS4 guidance of the nine main centres, which are:

 Newcastle

 MetroCentre

 Middlesbrough

 Darlington

 Sunderland

 Durham

 Stockton-on-Tees

 Redcar

 Hartlepool

1.11 We have also carried out an indicative desk based assessment of six smaller centres spread across the region. These centres were selected as case studies;

 South Shields

 Washington

 Bishop Auckland

 Ashington

 Peterlee

 Berwick-upon-Tweed

1.12 The health checks have been produced in accordance with PPS4 and have been assembled through a combination of site inspections, desk based research and consultation with commercial agents.

1.13 The emphasis of the health check analysis is to assess the performance of centres, whether there are any significant gaps in provision of town centre uses, and to determine the level of capacity that each centre has for further growth.

Stage 4: Policy Recommendations

1.14 We have then drawn out policy recommendations from our analysis of the quantitative and qualitative assessments. We have highlighted key spatial policy implications and made recommendations to be considered by local authorities and other parties at the local and/or sub-regional level. Structure of Report

1.15 This report represents the final version of the report incorporating the findings of the four stages highlighted above. It is structured as follows:

 Regional Town Centre Context

 Emerging Town Centre Trends

 Policy Drivers

 Quantitative Modelling

 Leisure Analysis

 Health Check Summary

 Spatial Policy Implications

1.16 Detailed health check reports have been prepared for each of the nine major centres which are available at appendix 4.

2.0 Regional Town Centre Context Town Centre Hierarchy

2.1 We have identified the hierarchy of the centres across the study area in terms of both retailing, as identified by Venuescore (a national dataset of retail rankings which scores centres on criteria including multiple retailer representation and market positioning), and settlement hierarchy, as is outlined in the soon to be obsolete Regional Spatial Strategy.

2.2 Mapping the Venuescore defined centres allows us to assess how town centre provision is spread across the region:

Figure 2.1: Venuescore Retail Hierarchy

2.3 The largest centres follow the road network, with Redcar, Middlesbrough, Stockton-on-Tees and Darlington situated along the A66 corridor, and Durham Newcastle and the Metrocentre on the A1. It is important to note the absence of centres between Ashington and Berwick- upon-Tweed, indicative of the sparse population distribution to the north of Northumberland. It is equally important to recognise that Venuescore may not reflect very recent improvements in the town centre offer which might have the effect of enhancing a centre‘s ranking, nor does it take into consideration the contribution to vitality and viability made by the independent sector. Nevertheless, it is a useful tool of comparison between centres.

2.4 By comparison, the North East Regional Spatial Strategy established a settlement hierarchy according to a combination of size, role and location of settlement:

Figure 2.2: RSS Settlement Hierarchy

2.5 The differences between the two plans simply demonstrate that the RSS settlement hierarchy does not mirror the reality of North East‘s retail hierarchy as it is viewed on the standard matrices of Venuescore. Whilst there are considerably more settlements defined by the RSS, there are a number of major settlements which do not have major retail centres and vice versa. The prime example of this is Durham, which could be described as underperforming in retail terms in relation to settlement size and status. Another example is Hartlepool, which is classed as a sub-regional settlement in the RSS but a Major District centre in Venuescore. Overview of Relative Performance

2.6 In this section we compare the performance of the major centres and the region as a whole. Looking first at the North East, the region has 4 centres in the 2009 Venuescore top 100; Newcastle, MetroCentre, Middlesbrough and Darlington. In 2008 the North East had 5 centres in the top 100, with Sunderland slipping to 111th place the following year. The chart below illustrates how the North East compares against other regions and shows the close correlation between the number of centres in the top 100 and population across all regions.

Figure 2.3: Comparison with other Regions (Venuescore, 2009)

Number of Top 100 Venuescore Centres 25 9000

8000

20 7000

6000 15 5000

4000 10 3000 Centres Population 000s 5 2000 1000

0 0

2.7 The chart overleaf illustrates the total quantity of retail floor space for each major centre in the North East, as defined by GOAD. We acknowledge that these figures may differ from estimates produced for other purposes. Some of the differences can be explained by the fact that the Goad defined boundary does not always align with the Local Authority defined town centre or primary shopping area boundary in each centre, and others by the fact that Goad includes A2, A3 and sui generis space as well as A1 uses. Nevertheless, we have adopted the Goad figures to ensure consistency across the region when comparing all the centres.

Figure 2.4: Floorspace in Key Town Centres 2008

GOAD defined floorpsace sq ft 4,000,000

3,500,000

3,000,000

2,500,000

2,000,000

1,500,000

1,000,000

500,000

0

Source: Experian GOAD

2.8 Newcastle clearly has the highest quantity of floorspace of any centre within the North East. This is not surprising considering it is the major commercial and retailing centre. Middlesbrough is the second largest centre, ahead of both MetroCentre and Sunderland. This may be slightly surprising since the MetroCentre, as an out of town shopping mall, is considered to be a directly competing centre to most of the town and city centres in the area.

2.9 The floorspace of a centre does not, however, correspond directly with comparison goods sales. This is largely due to traditional town and city centres having large quantities of secondary and tertiary retail floorspace within the GOAD defined boundary together with space devoted to convenience sales and service uses.

2.10 The chart below indicates total comparison goods sales for each major centre in 2008, derived from Experian GOAD. It should be noted that this data is indicative to provide comparison between centres but that a more accurate assessment has been carried out as part of our quantitative modelling exercise. This should therefore be seen as no more than a broad indication of the relative levels of sales between the different centres.

Figure 2.5: Comparison Goods Sales 2008

Comparison Goods Sales 2008 £m 800.00

700.00

600.00

500.00

400.00

300.00

200.00

100.00

-

Source: Experian GOAD

2.11 The 9 major centres have also been benchmarked against one another based on Venuescore (see Figure 2.6 overleaf), which follows broadly the same trend as the Comparison Goods Sales graph with Newcastle, MetroCentre, Middlesbrough and Darlington being the best performing centres. (Venuescore ranks the UK‘s top 2,000 + retail venues including town centres, standalone malls, retail warehouse parks and factory outlet centres. The retail offer of each venue is assessed using a scoring system which takes account of multiple retailers, each of which is weighted to reflect its overall impact on shopping patterns. For example, anchor stores such as John Lewis, Marks & Spencer and Debenhams receive a higher score than other unit shops. The aggregate score is called a location‘s ‗Venuescore‘).

Figure 2.6: Venuescore Rankings 2009

VENUESCORE 400

350

300

250

200

150

100

50

-

3.0 Emerging Town Centre Trends

3.1 In this Section, we comment in broad terms on UK national trends in retailing and leisure and the lessons for planning policy and development in the North-East region. They are described in no particular order of importance. Continued Growth of Food Retailers – the Battle for Market Share

3.2 The principal food retailers increased their combined floor space by about 140,000 sq m in 2008 (the latest year for which such data is available), which was an increase of about 1.3%. The ‗big four‘ (Tesco, Asda, Sainsburys and Morrisons), have been very active in opening new stores and extending existing. Morrisons and Sainsbury‘s in particular have grown their space significantly. Waitrose, Iceland and the ‗hard discounters‘ have also been busy acquiring new floorspace. Iceland, for example, has acquired 51 former Woolworths stores. Aldi and Lidl are reported to have opened 41 and 35 new stores respectively in 2008. Morrisons has very recently announced that it intends to open around 140,000 sq m of new store floorspace in the next three years. This was described as being approximately 60 new stores. Most of this is likely to be new superstores or extensions to existing such stores. Tesco, Asda and Sainsburys are also still very active in seeking to develop new superstores and store extensions, and Asda has recently acquired Netto stores across the UK.

3.3 Tesco in particular reportedly has plans to open over 220,000 sq m of new space in Britain this year through new stores and extensions to existing shops — more new shop space than its three biggest rivals combined. It has increased its target for new selling space by 20 per cent as it seeks to reinforce its dominance of the UK market. It has added the equivalent of the entire Waitrose chain to its British portfolio in the past two years.

3.4 Between 1998 and 2008, the number of superstores has risen from 1,117 to 1,553. Verdict Research Limited has demonstrated that this growth of superstores, almost all of which are operated by the ‗big four‘ and most of which are out-of-centre, has been at the expense of smaller supermarkets, food specialists, and off-licences and tobacconists. Put simply, the superstores have taken all of the growth in expenditure and more. This has put small food stores and shops in the smaller centres under pressure, although some of these are operated by the principal food retailers as their local store formats. Furthermore, the recession has put smaller food stores under even more pressure, as expenditure tightened, but the large superstore chains have been able to compete through heavy discounting.

3.5 The opportunities for development of new food superstores are diminishing, due to increasing market saturation, and tightened national planning policies aimed at restricting out-of-centre development (the sequential approach of the former PPG6 and PPS6, and now PPS4: ‗Planning for Sustainable Economic Growth‘ in England, and similar provisions in Scotland and Wales). However, at least until recently, food sales have not suffered the degree of downturn in the rate of growth suffered by comparison goods sales. To help maintain their growth in food retailing market share therefore, the major food retailers have moved aggressively into local convenience goods stores. Both Tesco and Sainsburys have bought existing chains of such shops and converted them to their own branded formats. Other food retailers are also expanding their local convenience store formats. In addition, the major food retailers have developed compact store formats for smaller towns, such as market towns; which hitherto depended on small town centre supermarkets and specialist food shops and

markets.

3.6 The national trends in the growth of the big four food retailers and the increasing number of major food operators in local convenience store formats is reflected in the North East. Tesco, Sainsbury‘s, Asda and Morrisons are all present in the region and there are a number of examples of new stores and extensions.

3.7 Examples of recent and proposed development in the region with a significant foodstore element are widespread. Examples include:

 Trinity Square, Gateshead Town Centre – Planning permission has been granted for the redevelopment of Trinity Square. The proposals comprise a new Tesco Extra store offering food, clothes, home products and furnishings, electrical goods, toys, entertainment alongside approximately 40 unit shops, cafes and bars. Trinity Square will reinvigorate the retail offer in Gateshead Town Centre after years of decline in the retail and town centre offer.

 Low Grange, Greater Eston – Low Grange proposals include some 1,200 residential units, a 11,150 sq m District Centre including a large foodstore, unit retailing, improved recreation facilities, a PCT Health Village and Library.

 Byron Place, Seaham – This was a new shopping mall scheme completed in 2007 which is anchored by an Asda superstore, with Wilkinson, Argos, FarmFoods, Greggs, Specsavers.

 Dalton Park, Murton – Outline planning permission is being sought for a foodstore of around 8,000 sq m and other uses including a hotel and cinema.

 Various Schemes, Peterlee - Planning permission is being sought for a food store of over 10,000sqm on a former college site at the edge of the centre. An additional edge of centre scheme on a former school site proposes a food store of over 7,000 sq m and a further food store proposal to form a linked extension to Castle Dene shopping centre in the town centre proposes to create a net additional floorspace of around 6,000sqm. Comparison Goods Sales by Food Retailers

3.8 Whilst convenience goods sales have held up moderately well over the last year or so, in which the rate of growth in comparison goods expenditure has dropped substantially and been negative, over a longer period convenience goods expenditure growth has come nowhere near the very high rates of growth in comparison goods expenditure achieved since the mid 1990s. Tesco and Asda in particular, and to a lesser extent Sainsburys and Morrison‘s, have therefore moved into comparison goods sales to drive company growth. Existing food superstores are still being extended wherever possible; with the great majority of the extension floor space used for the sale of comparison goods. The superstore operators have still had strong cashflow and have remained profitable throughout the recession. They have seen the recession as an opportunity to take market share from struggling comparison goods retailers. As a result, much of the expansion in superstore floorspace in recent years has been for the sale of comparison goods, for example through the installation of mezzanine floors. Since most of the stores large enough to achieve this are located out-of-centre, this would amount to decentralisation of comparison goods sales contrary to the principles of ‗town centres first‘ in PPS4. Clearly, it could threaten the smaller town centres (in particular) in the region.

3.9 The superstore comparison goods sales include new categories of goods such as furniture and DIY goods. The size of new superstores is also increasing substantially. Thus for example, Tesco is promoting its Tesco Extra stores, such as its store at Kingston Park in

Newcastle, which can be up to twice as large as the largest superstores of a few years ago. Tesco is also now starting to promote its ‗department store‘ concept, although no such stores have yet been developed. This strong growth by a small handful of retailers could in time threaten competition, by reducing the number of retailers in the market.

3.10 Asda is now developing non-food only ‗Asda Living‘ stores. Some of these are in or on the edge of town centres. This demonstrates that it is not essential for food retailers to extend their existing superstores or develop ever larger superstores, in order to capture more of the non-food market. Under the sequential approach, such outlets should wherever possible be in or on the edge of town centres. Asda‘s proposals demonstrate that although less desirable for the superstore operators, such an approach can be made to work.

3.11 There are several examples of large format foodstore formats with comparison goods across the region. The planned Tesco Extra in Trinity Square, Gateshead, is proposed to have a full comparison goods offer including food, clothes, home products and furnishings, electrical goods, toys and entertainment. A new Sainsburys superstore has also recently been permitted at Heaton in Newcastle, to replace a smaller store on the same site which will be demolished. The new superstore will have a substantially increased comparison goods offer. Pressures on Small Retailers and Secondary Shopping Areas

3.12 There is a widely held perception that the growth of superstores, and the move into local food retailing by the major operators, has had a serious impact on small retailers, many of which are independent. This is confirmed by the Verdict‘s data on the growth of sales in superstores at the expense of smaller supermarkets and specialist food retailers. In 2006 the House of Commons All-Party Parliamentary Small Shops Group enquired into this perceived phenomenon, and published its report, ‗High Street Britain: 2016‘. The report concluded, inter alia, ‘Large retailers find it much easier to offer improved propositions to affluent customers, attracting enough spend away from small shops to stop them trading, resulting in all consumers, within a specific catchment to become reliant on the large retailers’. The report also concluded, ‘The biggest losers, however, will be the consumers. Restricted choice of store brands, restricted choice of available products restricted choice of shopping locations, higher prices and reduced customer service are all strong possibilities in 2016. Although some consumers today may be benefiting from a competitive market this is entirely unsustainable and cannot continue’.

3.13 The report went on to observe that current trends threaten social inclusion, with potentially adverse effects for society. A number of recommendations were made to government, aimed at ameliorating the competitive environment for small retail businesses. Perhaps partly as a result of the Group‘s report, the Office of Fair Trading and the Competition Commission (soon to be merged) undertook its latest Inquiry into the supermarket ‗industry‘, which resulted in the proposed ‗competition test‘ for new foodstore developments, which is still under consideration by the government and has not yet been adopted.

3.14 Research published in November 2004 by the National Retail Planning Forum in the report ‗The Role and Vitality of Secondary Shopping – A New Direction‘ concluded that over the previous 10 years, there had been a significant change in secondary shopping. In such locations, the number of retailers had declined, but the number of service businesses had increased. The result was that in general, shop vacancy rates in secondary shopping areas had fallen – although there were specific pockets of decline and high vacancy, usually easily explicable by locational factors; such as being separated from the remainder of the town centre by a busy access road. The research also concluded that secondary shopping areas

are much more diverse in their composition than prime retail areas, and are heavily dependent on independent businesses.

3.15 A number of recommendations were put forward for enhancing the prosperity of secondary shopping areas (including small town centres, and district centres), which are applicable to town and district centres in the North East Region. In summary, these included:

 Creating a coherent pedestrian environment through breaching barriers to easy pedestrian movement, introducing new pedestrian flow generators, and improving linkages with the prime retail areas;

 Managing change to non-retail uses where appropriate

 Creating financially viable developments through introducing new value generators to form mixed use schemes

 Improving the public realm through new investment

 Supporting independent businesses by providing low cost business support services

 Applying asset management principles and niche marketing

 Evolving more sophisticated planning policies for change of use

 Applying town centre management

 Applying the sequential approach and controlling development.

3.16 Secondary shopping areas in large town centres, and small town centres and district centres as a whole remain important components of the overall retail provision. Being more diverse than primary shopping areas (and most retail parks) they provide a range of goods and services not available elsewhere. Whilst individual small town centres are of little importance at the strategic regional level, each is very important to the residents of its local catchment area. By meeting local needs, small town centres and district centres can help to reduce the need to travel, and thus contribute to sustainability and social inclusion. They also provide important local employment and contribute to the quality of life of local residents. Strategic and local policies which are aimed at supporting, developing and improving such centres, and protecting them from loss of trade to out-of-centre superstores and retail warehouses, will therefore be worthwhile.

3.17 Looking at some of the smaller centres in the region there is a noted downward trend in terms of retail rankings, with only Cramlington and Ashington increasing in rank between 2009 and 2010 in the below sample. As described in para 2.3, such retail rankings may not reflect wider improvements to the vitality and viability of such centres but are a useful gauge of how centres are performing in retail terms.

Fig 3.1: Venuescore Rankings 2009-2010

2009 2010 % Town Venuescore Rank Rank Movement change Redcar 102 230 222  -3.48 South Shields 111 236 206  -12.71 Hartlepool 99 248 227  -8.47 Washington 86 282 265  -6.03 Bishop Auckland 84 326 227  -30.37 Ashington 55 417 447  7.19 Cramlington 53 417 472  13.19 Chester Le Street 54 501 458  -8.58 Peterlee 46 552 536  -2.90 North Shields 44 562 558  -0.71 Berwick Upon Tweed 50 594 498  -16.16 Source: Javelin Group ‗Venuescore‘.

3.18 There are also examples of smaller centres performing well throughout the region. For example the Sanderson Arcade successfully opened in November 2009, adding 29 retail units to Morpeth‘s offer. It is now fully occupied, let to a range of strong independent retailers and national businesses. Morpeth is a key rural service centre, which no doubt underpins its relative prosperity. Retail Expenditure

3.19 Since the late 1990s, there was very substantial growth in retail expenditure on comparison goods. Over the period 1998 to 2008, Pitney Bowes ‗Retail Expenditure Guide 2009/2010‘ indicates that per capita expenditure on comparison goods in the UK grew at an annual average of 6.6% in real terms. This is above the historic long term trend (1978 to 2008) of 4.9% pa, and well above the ultra-long term trend (1964 to 2008) of 3.9% pa. In 2002, growth actually hit 9.4%. For convenience goods, the average annual growth has been much less, at 1.2% pa over the period 1998 to 2008. Even this is significantly above the long term trend of 0.4% pa and the ultra-long term trend of 0.2% pa. In addition, there has been some population growth. Over the period 2001 to 2008, for example, the UK population grew by almost 4%. The combined effect of population growth and growth in per capita expenditure has been substantial increases in total retail expenditure, and hence sales, particularly for comparison goods. However, much of this retail ‗boom‘ was substantially debt-financed, and as more recent events have proved, unsustainable.

3.20 At the end of 2007 the ‗credit-crunch‘ initiated a global economic downturn which at first slowly took hold in 2008; but since October 2008 became a spectacular ‗bust‘ with the near collapse of the banking system, followed by large-scale government support, both in Britain and elsewhere. As a result, the UK economy has suffered a severe recession, which continued throughout 2009. We expect that growth in per capita expenditure during 2010 on convenience goods will be around zero; and that on comparison goods very low. Oxford Economics (in Pitney Bowes ‗Retail Expenditure Guide 2010/11‘) forecast that over the period 2009 to 2010, UK growth in per capita expenditure on convenience goods will be 0.1%, and on comparison goods, 1.3%. For the period 2009 to 2015, they forecast average UK growth of 0.4% pa and 3.7% pa respectively; and for the period 2009 to 2020, 0.4% pa and 3.8% pa respectively.

3.21 These growth rates are well below the pre-recessionary long and ultra-long term trend rates indicated above. It means that over the medium term, there will be much less growth in expenditure available to support new retail floorspace in the North East region than in the 10 years preceding the recession; and hence the capacity for new floorspace will be significantly reduced. Whilst growth in expenditure on comparison goods is now beginning to pick up nationally, some of this will be needed to support the re-occupation of floorspace which fell vacant during the recession, for example vacant retail warehouses at Newcastle Retail Park, Byker, and remaining former Woolworths stores and other shops in town centres. It is also possible that the North East region, which has an above national average dependence on public sector employment, may not enjoy growth in comparison goods expenditure as high as that forecast for the UK by Oxford Economics, as a result of the government‘s austerity measures. Again, this would reduce the capacity for new retail floorspace. The rise in VAT on 1 January 2011 may also reduce growth in expenditure on comparison goods, and hence capacity for new retail floorspace. Retail Sales Densities

3.22 Since the end of the economic recession in the early 1990s, a substantial amount of new retail floor space has been developed. Much of it has been in the form of food superstores and retail warehouses, located on out-of-centre sites. Town centre development has been mainly in large and medium sized towns – the top 100 or so retail centres by size in the country. However, provision of new floor space has not everywhere matched growth in expenditure, with the result that (until the recent recession) sales densities have been rising in town centres, and in retail warehouses. Sunday trading and extended weekday opening hours have enabled existing floor space to absorb substantial growth during the ‗boom‘ years. Sale of higher value goods as incomes have risen, which do not necessarily need more space for storage, display and sale (and may need less owing to the trend for miniaturisation), has also resulted in higher sales densities. In practice, town centre sales densities have proved to be highly elastic, and the concept of ‗overtrading‘ needs to be applied with some caution, particularly in town centres.

3.23 In the North East region, sales densities are likely to have followed a similar pattern to the rest of the UK. Whilst they rose during the ‗boom‘ of the early to mid 2000s, particularly in town centres where little new retail floorspace was opened in that period (such as Durham and Newcastle), they have fallen back recently due to the recession. Town centre developments which were conceived and constructed during the ‗boom‘ years, but opened in the recession, e.g. Eldon Square extension in Newcastle City Centre, are likely to have contributed to falling sales densities, by increasing floorspace supply at a time of falling retail expenditure. Shopping Centre Development Pipeline

3.24 As at March 2007 shortly before the start of the ‗credit crunch‘ which led to the current recession, the UK shopping centre development ‗pipeline‘ comprising schemes of over 4645 sq m gross with planning permission or under construction totalled 3.62 million sq m. This is higher than had been seen since the early 1990s. The majority of this was expected to be delivered in existing town and city centres between 2008 and 2011. Most of this floor space was in large schemes in the larger centres. However, in 2008 many of the planned developments became financially unviable as development values fell, largely due to a downturn in the property market. Loan finance for retail development also largely dried up. As a result, almost all developers of schemes which had not started on site have postponed or scaled back the development, re-configured masterplans, or sought extensions of time to

planning permissions so their schemes can be implemented when the market recovers. There are a number of examples of schemes where construction has not yet started being abandoned, as a result of non-viability and financial difficulties experienced by the companies.

3.25 Although shopping centres that have not been built yet have the potential for delay or reconfiguring of plans, those that have recently opened or are nearing completion are facing a difficult early life; as letting prospects for this space have become difficult. It is not surprising that because of the economic slowdown, there are fewer schemes now in the pipeline. However, lengthy development cycles mean that preparations need to continue now, at least in terms of getting supporting planning policies in place, so as to ensure delivery of new shopping centres in time to benefit from the next upswing in the retail development cycle, as the economy recovers from recession.

3.26 Even before the onset of the economic downturn, there were few schemes committed or under construction in small town centres and district centres. It is difficult to make development financially viable in small centres, owing to low rental values for retail floor space there. Furthermore, the most sought after ‗anchor‘ stores, Debenhams, House of Fraser and John Lewis are facing difficult trading conditions, and will only consider acquiring the right stores in the right locations – which are mainly large and successful town centres (although John Lewis announced a year or so ago a programme to develop smaller stores in smaller town centres). There are currently very few other retailers, such as Next, Primark, Top Shop, River Island, H&M, New Look, which will currently consider acquiring major new ‗secondary anchor‘ stores in new town centre developments. This is making it difficult to prepare town centre schemes in smaller town centres such as Stockton On Tees, Bishop Auckland and resulting in downwards pressure on rents, letting prospects and financial viability. Again, as a result of the economic slowdown in the town centre retail development market, schemes which are not yet committed are being deferred until more favourable economic and financial conditions return.

3.27 There has been a long term trend towards polarisation of comparison goods retailing into the largest town and city centres in the country at the relative expense of the smaller centres. Thus, whereas in 1971 the 200 largest centres in the country accounted for about 50% of all comparison goods sales, by 1996, this proportion has risen to about 75%1. There is no evidence since indicating that this trend has halted or been reversed. Indeed, much of the ‗pipeline‘ or recently opened space for new shopping centres described above is in the larger centres, e.g. London suburbs, Newcastle City Centre (Eldon Square extensions), Wolverhampton, Exeter, Plymouth, Leicester, Leeds, Bristol, Bath, Belfast, Liverpool. This polarisation trend is unlikely to be reversed in the foreseeable future. However, mixed use development including new retail uses, and new food/non-food stores, may in principle be possible in some smaller centres, subject to sufficient expenditure support and the availability of suitable sites.

3.28 The region currently has several large shopping centres in pipeline at varying stages. There are proposals for major retail led regeneration of the East Pilgrim Street area in Newcastle City Centre. The proposals are at early stages but significant progress has been made towards land assembly and there is a comprehensive planning framework in place. The Trinity Square scheme at Gateshead Town Centre has now secured planning permission and there is also a Town Centre extension scheme at Cannon Park, Middlesbrough.

1 Sources: Census of Distribution 1971, and ‗National Survey of local Shopping Patterns 1996‘ Hillier Parker.

3.29 The development pipeline follows on closely from the delivery of schemes of major regional importance namely the Eldon Square Extension and MetroCentre Yellow Mall. Retail Warehouses

3.30 There have been a number of high profile failures amongst retail warehouse operators as a result of the recession, including Woolworths, MFI, Land of Leather, Rosebys, Borders; and closure of underperforming retail warehouses by JJB Sports. As a result, the national vacancy rate for retail parks rose from 8.3% in 2007 to at least 15% in 2009, resulting in up to about 300,000 sq m of vacant retail warehouses as is evident in the locations such as St James‘ Retail Park in Newcastle . Nevertheless, there remains some demand nationally for new retail warehouses from retailers, and support for this format from developers and investors – where planning permission can be obtained.

3.31 The range of retailers wishing to trade from retail parks continues to widen, well beyond the traditional ‗bulky goods‘ furniture, floor coverings, electrical goods and DIY goods retailers. Retailers seeking retail park stores nationally and in the North East region now include Next, Asda (with its Asda Living format), H&M Hennes, Debenhams, Arcadia Group, Boots, New Look, Argos. Perhaps partly as a result of the weakened value of the pound, some continental and USA retailers are now starting to enter the market for retail warehouses in the UK. Examples include Kitchen House, Seats & Sofas, JYSK, Homesense. John Lewis has recently announced its intention to develop a chain of up to 50 stores of about 5,000 to 7,000 sq m gross, selling homewares, many of which could potentially be on retail parks. Marks & Spencer has opened a homewares and food store in a retail warehouse at Cardiff, and plans to roll out this format more widely.

3.32 At the same time, the former PPG6, PPS6 and now PPS4 have imposed the sequential approach, which theoretically makes it more difficult to expand the supply of retail park stores. As a result, there is pressure for relaxation of bulky goods conditions on existing retail warehouses (often incrementally on a unit by unit basis), extension of existing retail parks and subdivision of large stores. This includes pressure for food retailing to be allowed from retail warehouses which have fallen vacant due to the recession, to help satisfy the main food retailers‘ thirst for new superstores. A case in point would be the recently approved superstore scheme at the Newcastle Shopping Park in Byker. The new Asda superstore will occupy the former Woolworth‘s BigW store.

3.33 Large numbers of mezzanine floors have also been installed, taking advantage of previously lax planning regulation of internal alterations, thus substantially expanding out-of-centre trading space. There was a dash to complete the installation of mezzanine floors wherever possible, before the new regulations to prevent it were imposed in May 2006, as can be seen within many of the retail warehouses in the region. Surely a classic case of ‗shutting the stable door…‘! Most retailers seeking retail warehouse space will only agree to occupy a store if it has planning permission for installation of a mezzanine floor.

3.34 In the North East Region, pressure to expand many of the existing retail parks or build new retail parks is currently somewhat muted, as a result of the recession and vacant stores on existing retail parks. However, there has and continues to be pressure to relax bulky goods restrictions, and remove prohibitions on food sales from existing retail parks, usually on a unit- by-unit basis. Internet Shopping

3.35 Internet and other forms of online shopping have increasingly become a major feature of the

retail landscape. Verdict estimated that in 2008, online spending accounted for approximately 6.4% of all retail expenditure (having grown by 25.0% during the year)2. It forecasts that this will rise to 10.0% by 2013. Based on the Verdict findings, we calculate that in 2008, 4.1% of all food and grocery sales were via online shopping, and 8.3% of all comparison goods sales.

3.36 Some of the recent growth has been at the expense of traditional non-store sales, in particular mail order shopping. However, Verdict estimated in 2008 that ‘four out of five online purchases are made at the expense of another retailer.’ Internet spending has not been isolated to so-called ‗easy to mail‘ goods. Many consumers admit to browsing products on sale in ‗high street‘ stores, before ordering the same goods online at discounted prices.

3.37 In order to combat the browsing but not buying phenomenon, increasing numbers of traditional retailers are ‗internet price matching‘ as well as diversifying their channels of product distribution to embrace the internet in parallel with continuing store sales. Many trusted brands which also have traditional ‗bricks and mortar‘ stores are now embracing ‗clicks and mortar‘. This is also the case with the major food retailers, all of which (apart from Morrisons) have internet shopping channels, in some cases sourced from local stores (e.g. Tesco) – Morrisons has recently announced plans to trial online shopping in selected areas in 2011. The recession has given a boost to online shopping by offering traditional retailers the potential for cost savings. Verdict comment, ‘Unfavourable economic conditions are forcing retailers to scale back their physical portfolios, but by investing in their online operations they can reach a wider customer base.’ Thus for example, John Lewis has only a small number of department stores, but by means of John Lewis Direct can cover the entire country. The opportunity to reach a wider customer base also applies to small independent retailers as to national multiples, and perhaps more so. An independent specialist retailer located in low cost accommodation in a small market town or a secondary shopping area in the region, for example, can build a substantial business by means of the internet.

3.38 Verdict now expects continued strong growth, albeit with a flattening of the trend as the online market matures, a substantial part of which will be at the expense of traditional retail shops and stores, despite traditional retailers embracing multi-channel selling. When the recession ends, Verdict predicts ‘a jump in big-ticket purchases online’ owing to deferred replacements, leading to growth in online sales of furniture and floorcoverings (which so far have achieved low online market penetration). The trend to online retailers offering free delivery will also help growth. Clearly, internet shopping poses a threat to town centres in the Region. However it also creates potential opportunities for retailers based in the region to serve a national catchment, rather than just shoppers living within a short travelling distance. This applies mainly to specialist retailers selling unusual or unique products; many of which are independents rather than multiples, and are located in low rent accommodation, for example in market towns or in secondary shopping areas in the larger towns. The Implications for the North-East Region

3.39 There are a number of implications of the above trends for retailing and retail development in the North-East region, which may be summarised as indicated below.

3.40 Apart from foodstores, new retail development generally is likely to be depressed for at least the next two or three years as a result of reduced retailer demand and financial viability. All town centres in the region will be likely to experience the same conditions. However, it will be important to continue preparations for any new retail provision needed in town and district

2 ‗UK e-Retail 2009‘, Verdict Research Limited, May 2009

centres in the region so that it can be brought to the market as the economy recovers. Good examples of this are the proposed retail-led mixed use regeneration project at East Pilgrim Street in Newcastle City Centre, and the proposed Holmeside Triangle site in Sunderland City Centre, both of which will take many years to bring to completion.

3.41 Substantial new comparison goods retail developments will only be possible in the larger town centres in the region. This means that the retail dominance of the larger centres, in particular Newcastle City Centre, MetroCentre, Middlesbrough, Sunderland, Darlington and Durham, will continue and may increase. This will have implications for transport in the region.

3.42 In many smaller town centres, rental values will be too low to make new development financially viable, retailer demand will be inadequate, and expenditure support will not be available. However, in some of the smaller centres (particularly those with faster growing catchment populations), it might be possible to achieve some new retail developments if these could be provided at relatively low cost, or as part of mixed use schemes which include other value generators. An example of this is Newton Aycliffe, where a retail scheme is likely to be forthcoming in the short term. The key will be low cost space, with good car parking and public transport access in close proximity.

3.43 In some of the more attractive market towns, and/or those more distant from much larger competing centres it may be possible to achieve new town centre developments on a scale commensurate with their functions and catchment areas. The key in these towns will be to take advantage of and build upon their local distinctiveness, so as to reduce the need for catchment area residents to travel to larger but more distant centres. The increasing cost of transport should aid such localisation of shopping patterns in the region.

3.44 If the medium-sized and smaller town centres in the region are to be regenerated, it will be essential to resist pressure for more out-of-centre retail development in new food/non-food superstores, extension of existing superstores to sell more comparison goods, and in retail parks in such towns. It will also be essential to refuse applications for relaxation of bulky goods conditions or removal of conditions preventing food retailing. Such out-of-centre development is quick, low cost and easy; whereas town centre development is relatively slow, expensive and difficult. However, the more that the easy option is taken, the more it decentralises growth in expenditure and retailer demand which will be needed to support planned new town centre retail developments in accordance with PPS4 – and thus makes it less likely that they can be achieved.

3.45 In line with national trends, in the North East region the main food retailers are pressing ahead with their move into comparison goods sales in spite of the slow recovery from the recession. Any large store extensions (if located out-of-centre) could soak up additional expenditure, or put pressure on town and district centres, depending on how quickly the country recovers from the recession.

3.46 Whilst the Coalition Government has recently confirmed its commitment for Growth Point funding in 2010/11, future areas of growth will be determined at the local level. Where growth is planned it will be important for Local Development Frameworks to direct such developments to existing town centres wherever possible. However, new superstores could form important anchors for any new town or district centres planned.

3.47 The mechanisms available to support smaller town centres and independent retailers are changing in light of the coalition government. Future means of support for local enterprise such as Local Economic Partnerships should try and help local retailers seeking to establish

an internet sales capability to give them national reach. They should also seek to support initiatives by smaller town centres to create a viable internet presence by establishing a town centre web ring. There may also be merit in seeking to facilitate and encourage delivery of low cost business support services to independent retailers and service businesses, most of which are located in small town and district centres, and the secondary shopping areas of large town centres. Emerging Leisure Trends

3.48 Performance within the UK leisure industry has varied by sector within the past year. All sectors have inevitably been impacted by the poor economic climate but it is the availability of finance to operators across the various sectors which is now determining which of those sectors return to health most quickly and which continue to struggle.

3.49 From a land use perspective, there has been a move towards larger floor plate requirements which together with the demands for co-location of facilities has necessitated larger sites which has pushed leisure development into out of town locations.

The licensed Retail Sector

3.50 The Licensed Retail sector has fared better than most economists predicted, with eating out expected to have been the first and worst affected as consumer spending reduced. Prior to the recession, disposable income levels had been growing by an average of 2.7% per annum with discretionary spending in excess of this with annual growth of 3.8%. It was this growth in discretionary spending that supported the expansion of the pub and restaurant operators. For example, during 2006 and 2007, Gondola, which operates restaurant brands Pizza Express and Zizzi, expanded its portfolio of restaurants by 44 while JD Wetherspoon expanded by 149 outlets between 2001 and 2007.

3.51 With few restaurant groups publicly quoted, evidence of like for like sales is rarely published. The Restaurant Group plc (portfolio including Frankie and Benny‘s and Chiquito), however, has reported steady results. The most successful operators were those able to maintain quality of product at value for money. Buy One Get One Free or 2 Courses for £10 have managed to maintain like for like sales for many operators, although at the expense of profit margins.

3.52 With consumer confidence returning and retail sales slowly improving, it would appear that the impact of the economic conditions may be subsiding, despite fears of a ―double dip‖ recession. The multiple operators are showing tentative signs of expansion, although at a lower rate than previously planned.

3.53 In some cases this expansion is in order to capitalise on the increasing incentives offered by landlords while negotiations within the property market remain very much geared towards the tenant. JD Wetherspoon plans to open 250 new pubs over the next 5 years. Gondola has 11 new restaurants in the pipeline (including a new Pizza Express in Eldon Square, Newcastle) having opened 36 new premises during 2008/9 and 28 in 2009 /10 (including a new opening in Gateshead Metro Centre), despite having a previous target of 25 new sites a year, Tragus aims to open 20 new restaurants in the current financial year as part of its Cafe Rouge, Bella Italia and Strada chains. In March 2010, The Restaurant Group announced that it is targeting the opening of up to 25 new sites, up from a previous target of up to 20. The operator of Frankie & Benny‘s, Garfunkel‘s and Chiquito has benefited from a move away from high streets into out-of-town shopping complexes and multiplex cinemas

Hotels

3.54 The UK hotel market comprises both the provincial and London hotel markets. In 2008, UK hotel performance started to deteriorate with the majority of decline occurring in the latter part of the year, following the heightening of the financial crisis in September 2008. Occupancy dropped 2.5% to 73.9% and although ARR (average room rate) rose by 2.3%, RevPAR (revenue per available room) reduced to £74.10 from £74.33, driven down by the drop in occupancy.

3.55 UK regional hotel performance recorded a decline in occupancy of 1.7 basis points to 70.2% in 2008 and a further 2.3 drop in 2009 to 68.2%. AARR increased marginally by 0.4% in 2008, however it dropped by 7.8% down to £68.65 in 2009. As a result, RevPAR, largely driven by the decline in room rates, dropped to £46.83, a 10.8% fall compared to 2008.

3.56 The figures for January 2010 evidenced the continuing negative trend witnessed during 2009 with RevPAR down by 6.2% compared to January 2009, the result of a 6.5% drop in AARR down to £64.07. As hoteliers moved further into the recession, declines in profit and revenue continued with profit falling by 19% in January 2010. However, it is worth noting that the first quarter is always the least profitable since it includes January and February, months where there is typically lower hotel demand.

Fig 3.2: UK Hotstats Data: Regional Hotels

2008 2009 Change Jan-09 Jan-10 Change Occupancy % 70.50 68.20 -2.30 54.00 54.20 0.20 AARR £ 74.45 68.65 -7.8% 68.55 64.07 -6.5% Room RevPAR £ 52.52 46.83 -10.8% 37.03 34.74 -6.2% Total RevPAR £ 102.53 92.37 -9.9% 73.70 68.33 -7.3% IBFC PAR £ 33.73 28.51 -15.5% 13.40 10.86 -19.0% Payroll % 31.30 31.40 0.10 38.70 39.80 1.10 Source: TRI Hotstats

3.57 Typically the performance of UK regional hotels is linked to the performance of the local economy. As a result of the current financial climate and economic downturn, it is anticipated that this will affect consumer spending which is likely to impact on hotel cash flows. We therefore anticipate that 2011 will continue to be a tough year for hoteliers with increasing downward pressure on rates as a result of declines in occupancy. Branded hotels are expected to outperform non-branded independents in this tough trading market since they benefit from access to wider sales and marketing support and distribution channels (routes to customers).

3.58 The illiquid debt markets have meant that there is little debt provision to support hotel construction projects. Banks are no longer supporting development finance due to the perceived risk involved and the extensive exposure that developments carry currently. Full- service hotel development in particular carries significant cost implications and in anything other than super prime locations, funders will tend to resist out of hand consideration of such projects at present. Banks seem to be interested only in lending on existing profitable hotels and to long established well-capitalised customers.

3.59 The lack of debt is restricting the number of parties that are able to currently consider hotel development. As a result, there are few buyers for land projects that will lead to construction of hotels. At the lower end of the hotel spectrum (budget and mid-market) there are a very limited number of hotel companies that are able to use their own funds for development e.g.

Accor and Whitbread. Additionally a limited number of hotel companies can offer institutional type leases which are proving to have some banking support. The result of this is that the majority of the development pipeline is tending to focus on these projects at the lower tier of the hotel market.

3.60 Over last 18 months a number of new brands have been entered the market and this has occurred across all segments. New budget to mid-market brands include Hampton by Hilton, Garden Inn (Hilton), Courtyard (Marriott) and also include the introduction of non-traditional hotel pod-hotel concepts promoted by easyHotel, Nitenite and YOTEL. Superior quality full- service brands include DoubleTree and Denizen (Hilton), Pullman (Accor), Indigo (InterContinental Hotels Group), Element and Aloft (Starwood), Andaz (Hyatt), all of which will consider new build or conversion opportunities. Another popular concept is serviced apartments, a sector which has been around for some time but has undergone a rejuvenation in terms of the quality of offering and reduction in the minimum length of stay. Major hotel chains are now launching brands targeted at this market e.g. Staybridge Suites (Intercontinental Hotels Group), Adagio and Suitehotel (Accor).

Cinemas

3.61 After a period of poor performance, 2009 marked a successful year for cinema operators. The revival of the cinema has been partly attributed to the recession. It is thought that as household budgets become tighter, so people are looking for cheaper evening and weekend entertainment, with cinemas being competitively priced in comparison with dining, theatre and bars.

3.62 In 2009 173,461,335 people attended the cinema in the UK. This is up from 164,222,082 in 2008, an increase of 5.6%.

Figure 3.3: UK Annual Cinema Admission Figures

Source: Film Distributors' Association

3.63 Another feature of the successful year was the focus on the ‗cinema experience‘. This was the focus of a marketing campaign, trying to negate the appeal of piracy in particular. This was helped tremendously in 2009 by the increasing popularity of 3D cinema. Films such as Up and Avatar, and in 2010 Toy Story 3 and Alice in Wonderland, all of which were shown in 3D as well as 2D, have characterised this push towards the ‗experience‘ by offering something most viewers are yet unable to recreate in their own homes.

3.64 3D delivery has also extended the length of time films remain popular while at the cinema. According to Screen Digest, the "burn rate" of 3D films is a lot slower than the 2D variety - they continue to make money at the box office for a longer period. Nearly 30% of revenues are made after week four compared to 16% on 2D films.

3.65 The current threats to the industry remain from familiar sources – home entertainment and piracy. Piracy is estimated by F.A.C.T (Federation Against Copyright Theft) to cost the British film, broadcasting and associated industries billions of pounds a year in lost revenues and jobs. In the UK alone the DVD/film piracy industry is estimated to be worth over £400 million a year.

3.66 Home entertainment also impacts on cinema attendance with the cost of a DVD, particularly from online retailers, and a cinema ticket getting closer to parity while film distributors push to release DVDs in closer proximity to cinema release date

3.67 The UK cinema industry is a mix of national and strong local operators. There are just 5 major operators in the UK, only 3 of which have more than 50 sites. Each cinema operator has, on average, just over 9 screens at each cinema.

Fig 3.4: UK Cinema Operators

Operator Sites Screens Odeon 107 834 Cineworld 74 758 Vue 63 608 National Amusements 21 274 Ward Anderson 24 206 Source: UK Film Council

3.68 The increase in cinema viewings, and particularly the focus of the cinema ‗experience‘, has seen the MetroCentre redevelop its offer. The Yellow Mall extension at MetroCentre now includes a 12 screen IMAX with full 3D capability. There have been other cinema proposals in the region such as a proposal currently pending for a new cinema at the out- of-centre outlet shopping park, Dalton Park.

Evening Economy

3.69 The evening economy has been growing over the last 10 years which is particularly noticeable in cities such as Newcastle which came to be known as a ‗party capital‘, with disposable income levels increasing by 2.7% per annum and discretional spending by 3.8% per annum. This has led to the expansion of many licensed retailers in the High Street of town centres up and down the country.

3.70 The Bank of England states that household consumption is forecast to increase by just 0.7% in 2010 and by 1.9% in 2011. This is a predicted rise from the -4% drop in consumption

expenditure recorded by the ONS in 2009. At the same time, the household savings rate is expected to be higher than previous levels throughout this year, rising to 9% of income in December, and only expected to ease back at the end of 2011.

3.71 The fall in household consumption has made for difficult trading conditions, with little chance of respite on the horizon. That said, there have been indications of resilience in the market, with some operators reporting positive like-for-like sales growth in 2009. In most instances this has been at the expense of margins in some cases, with special offers driving turnover.

3.72 Some of the larger multiple operators look to be continuing with existing expansions plans throughout the forthcoming period. Our retail agency teams indicate that many are looking to capitalise on increasing incentives offered by landlords. Tragus, Gondola and JD Wetherspoons all have requirements for sites at present in the North East.

3.73 Trading conditions in the pub market continue to be poor, although there are perhaps some signs of encouragement and some clear trends emerging. By early 2010, pubs were closing at a rate of 39 a week, down on the 52 a week closure rate in the first half of 2009, according to a report from the British Beer & Pub Association (BBPA). A net total of 1,013 pubs shut their doors for the last time between July and December 2009, with the loss of over 10,000 jobs. A total of 2,365 pubs closed during the whole of 2009.

3.74 Although these latest figures appear to show a sign of improvement closures remain at historically high levels. The BBPA state that there are now 52,500 pubs in Britain, down from the 58,600 pubs operating when the Licensing Act came into force in 2005. Furthermore the number of bar and pub companies going out of business has increased – 23 during the first quarter of 2010 compared with 11 in the same period in 2009.

3.75 While all types of pub are closing, the business failures do not appear to have spread equally over all sectors. In the second half of 2009, the number of independently owned ‗free houses‘ fell more rapidly than the number of pubs in the leased and tenanted sector. There were 576 closures among free houses, compared with 320 among tenanted pubs, despite the latter being far more numerous overall.

3.76 Food-led pubs are proving more resilient drink-led premises, with a closure rate of just 0.6 per cent in that category (130 pubs). The closure rate among drink led pubs was over three times higher, at 2.1 per cent, or 883 net closures.

3.77 Market evidence would indicate that investor appetite for pub assets appears to be returning. Greene King, Marstons and Mitchells & Butlers are reported to be looking actively for acquisition opportunities, with Greene King rumoured to have recently spent £43m acquiring pubs from competitors.

Health and Fitness

3.78 Health and Fitness is a commercial leisure sector that has grown rapidly over the past 10-15 years. It is becoming increasingly competitive, with many operators continuing to expand aggressively including in the North East. Most locations tend to offer national Health and Fitness operators, hotel gyms, one or two strong local operators and a municipal offer. The major commercial health operators are as included in the table overleaf:

Fig 3.5: UK Commercial Health Operators

Company Brand(s) Clubs Members Average members/club Fitness First Holdings Fitness First/Fitness First for Women 170 420,000 2,471 LA Fitness LA Fitness 86 235,000 2,733 David Lloyd Leisure Operations David Lloyd/Next Generation 78 426,692 5,470 Virgin Active Virgin Active 72 320,000 4,444 Bannatyne Fitness Bannatyne's Health Club 60 170,000 2,833 Societe Generale Esporta 55 177,500 3,227 DW Sports Fitness DW Sports Fitness 52 215,800 4,150 Nuffield Health Nuffield Health Fitness & Wellbeing 51 150,000 2,941 Source: Mintel

3.79 Global Market Insite estimates that more than a quarter of private club members have cancelled their membership as a direct response to the credit crunch, with more intending to ‗trade down‘ to cheaper packages at the end of contractual obligations.

3.80 Commercial health clubs have always experienced a high turnover of members, with 30% to 40% of members cancelling their subscriptions each year. This attrition rate is even more of an issue in the current climate, as new members are less likely to replace the old.

3.81 Gym membership is frequently one of the first items to be cut from households looking to save money in their budget. With average monthly memberships exceeding £40 in the regions and £50 in London, and most cardio vascular exercise easily replicated for free outside of the gym it is not too difficult to see why.

3.82 Trade magazines indicate that, with new customers becoming increasingly hard to come by, focus is being placed on encouraging existing members to use pay-per-use facilities more frequently.

3.83 Despite generally poor trading conditions, some operators are still looking to open new centres. Virgin currently has a requirement for a new facility offering its full range of services in Newcastle City Centre. The implications for the North East

3.84 Many of the implications of the above leisure trends reflect those identified in respect of retail trends. It is likely that leisure development generally will also be depressed for the next two to three years with the exception of multiple restaurant operators which are pursuing acquisition plans despite the economic down turn. Multiple operators such as Pizza Express, Prezzo, Cafe Rouge, Nando's and Frankie & Benny's have continued to grow through acquisition and have also shown positive sales growth in recent months. Fleurets has reported that the major multiple operators are collectively looking to open over 400 new restaurants over the next year and that it is the predominance of leasehold arrangements across the sector, as opposed to freehold, that has meant that finance for operators has been less problematic than in other sectors of the Leisure industry. Given that there are gaps within the North east market amongst some of the operators listed above, it is likely that there may be interest in opening new facilities within the region.

3.85 In relation to the hotels sector, understandably a significant proportion of this growth has been driven by the London market, however regional markets are showing signs of year-on-year growth, implying that there may be scope for further development within the north east in future.

3.86 The dominance of larger centres in the region is also likely to continue but there may well be pressure for out of centre development to accommodate large floorplate requirements. In planning for future leisure requirements, a key consideration for local authorities across the North East is whether to attract such activities back to town centres through allocating and assembling suitable sites

4.0 Policy Drivers

Introduction

4.1 Since the election of the Coalition Government there have been a number of changes imposed or proposed in respect of the policy drivers for this study. Set out below is a summary of the relevant changes.

4.2 This section also provides commentary on the wider political changes which may occur as set out within the Coalition‘s Programme for Government, the previous Conservative Green Paper Open Source Planning and the recently published Localism Bill. Emerging National Policy Drivers

4.3 On 22 July 2010, Eric Pickles, the Secretary of State for Communities and Local Government announced to Parliament the revocation of Regional Spatial Strategies (RSS) under s79(6) of the Local Democracy Economic Development and Construction Act 2009. The Governments chief planning advisor wrote to Local authorities stating that RSS no longer formed a part of the development plan for the purposes of s38(6) of the Planning and Compulsory Purchase Act 2004. The statement went on to say that the abolition would require legislation in the ‗Localism Bill‘.

4.4 In response to Pickles announcement, CALA Homes launched a legal challenge in the high court, claiming that the Secretary of State had acted outside of his powers in revoking RSS. CALA Homes stated that the legislative provision used to revoke RSS had not been correctly used. It also asserted that SEA (strategic environmental assessment) was needed under European Policy before such a major policy change could be made. CALA Homes has been successful in its case and as such RSSs remain in force at the current time. Royal assent of the Bill is unlikely to be forthcoming until the later stages of 2011. As such we would expect to see RSS in place for a number of months to come.

The Localism Bill

4.5 The Localism Bill was introduced to Parliament in December 2010. The Bill is in essence about shifting power from central government back into the hands of individuals, communities and councils.

4.6 Key elements of the Bill include:

 new freedoms and flexibilities for local government;

 new rights and powers for communities and individuals;

 reform to make the planning system more democratic and more effective; and

 reform to ensure that decisions about housing are taken locally.

 in respect of planning the Localism Bill contains proposals to make the planning system clearer, more democratic, and more effective. These aspects include:

 the abolition of Regional Spatial Strategies;

 a new right for communities is introduced allowing them to draw up a neighbourhood plan;

 rform of the Community Infrastructure Levy; and

 a Duty for Neighbouring Authorities or Groups of Authorities to work together on planning issues

Local Enterprise Partnerships

4.7 Following the announcement earlier in the year that the 8 Regional Development Agencies are to be abolished, the first wave of 24 LEPs (selected from 62 respondents) have been invited to constitute their boards and develop their proposals in more detail. The LEP regime applies across England outside of London. The first wave of successful LEPs includes:

 Teesside

 Cheshire and Warrington

 Cumbria

 Greater Manchester

 Leeds City Region

 Liverpool City Region

 Sheffield City Region

4.8 Since the first wave the Government has also approved a North Eastern LEP covering all of the authorities outside of the Teesside LEP. LEPs have been formed by local business and civic leaders. Their remit will be diverse and will vary from LEP to LEP depending on local needs and will include:

 Co-ordinating proposals or bidding directly for the RGF;

 Co-ordinating approaches to leverage funding from the private sector;

 Participation in national planning policy;

 Strategic housing delivery, including pooling and aligning funding streams;

 Working with local employers, Jobcentre Plus and others in local job creation.

Local Planning Policy Development Guidance from Central Government

4.9 Following the government‘s earlier attempt to revoke RSS, guidance was issued to Local Authorities on how to deal with the changes. Whilst this guidance is to a certain extent redundant since the CALA Homes challenge, it is still useful to review this, as it signals the Government‘s intentions and is likely to be relevant once the Localism Bill is published as this will form a material consideration in planning decisions.

4.10 The Government‘s Chief Planning Advisor Wrote to Local Authorities explaining that Local Development Framework preparation should continue. In relation to retail the following direct statement has been made by the coalition government:

4.11 Retail/Leisure: Specific reference has been made to the need for Local Authorities to continue having regard to PPS4: Planning for Sustainable Economic Growth in preparing LDFs and, where relevant, take this into account in determining planning applications for retail, leisure and other main town centre uses. In assessing any planning applications proposing unplanned growth in out of town shopping centres (particularly those over 50,000 sqm gross

retail floor area) local authorities are advised to take account of the potential impacts of the development on centres in the catchment area of the proposal.

Further National Policy Development

4.12 The Conservatives‘ Planning Green Paper ‗Open Source Planning‘, published in February 2010, set out numerous plans for reforms to the planning system. Whilst this paper has no formal standing and will not directly influence policy development, it does give an indication of the Conservatives‘ views on potential reforms and, as such, some of the changes are reflected in the Localism Bill. In accordance with the proposals set out within the paper, there are likely to be a range of further changes to government policy as secondary legislation emerges which will impact upon the shape of local planning policies. We summarise below those potential changes which would be of particular significance to any masterplan, as follows:

4.13 Flexible Zoning – The paper proposes amendments to the Use Classes Order so that people can freely change the use of buildings within a range allowed by the local community in its local plan. This will allow authorities, for example, to allow any kind of retail or service use within a designated zone, such as a shopping high street.

4.14 Local Authorities to respect the spatial policies of neighbouring Local Plans – Planning inspectors will be asked to report to the Secretary of State on any breaches of national planning guidance and process. This will include highlighting instances where Local Plans do not have respect to the Plans of neighbouring authorities. The intention is that all other issues will be left for local determination. The green paper hints at a level of competitiveness between authorities, stating that ‗there will be an incentive for local councils to submit plans quickly to ensure that their view of the spatial distribution of development will guide neighbouring local plans‘. Clearly this could lead to conflict where there is no strategic spatial hierarchy across local authority boundaries providing a guiding framework for the location of new development.

4.15 Time limits - If new local plans have not been completed within a prescribed period, then the presumption in favour of sustainable development will apply. The paper goes on to clarify that this would entail all applications being permitted so long as they were in conformity with national policy. As above, this will put pressure on local authorities to quickly develop a clear policy stance on where they would like to see retail and leisure development take place in future. Where there is a conflict between the objectives of neighbouring authorities it may be difficult for local authorities to adopt a local plan and as such a process of planning through appeal to the Secretary of state may occur.

4.16 Immediate neighbours – The green paper states that government will legislate to provide a faster approvals process for planning applications to which a significant majority of the immediate residential neighbours raise no objection. This will give developers a strong incentive either to design buildings in ways that do not adversely affect immediate neighbours or to reach voluntary agreements that recompense immediate neighbours for any loss of amenity.

4.17 Reinstatement of the needs test – the paper stated that the needs test would be readopted, and that the government will enable local councils to take competition issues into account when formulating their local plans.

4.18 Tariff - The paper stated the intention to scrap CIL and non site specific planning obligations

and replace them with a unified local tariff at graded rates dependent on the size of the development.

4.19 Whilst this paper has no formal standing it seems likely that some of these changes will come into being in one form or other as the coalition government pushes forward on the localism agenda.

Comprehensive Spending Review

4.20 The Coalition Government has released the eagerly anticipated Comprehensive Spending Review which sets out its spending plans for reducing the £155 billion annual deficit. Huge cuts to public funding are outlined, with local authority budgets seeing cuts of up to 30% over the next 4 years. These announcements will have a significant impact upon areas of the country where the economy is heavily reliant on public spending, in particular this will impact substantially upon the economy in the North East.

4.21 It must be expected that such dramatic cuts will have knock-on effects on consumer spending that will adversely affect the region‘s town centres, not only in terms of falling levels of spending, but also in the withdrawal of public facilities that have helped anchor many centres, such as libraries and leisure centres.

Regional Growth Fund

4.22 This is a £1.4 billion centrally held fund that will be distributed between April 2011 and April 2014. The two key objectives of the RGF are to:

 stimulate enterprise by providing support for projects and programmes with significant potential for economic growth and to create additional sustainable private sector employment; and

 support those areas and communities that are currently dependent on the public sector to make the transition to sustainable private sector-led growth and prosperity.

4.23 It will be possible for the private sector, public-private partnerships and suitably constituted LEPs to submit bids. Criteria for successful bids include:

 Meeting the two key objectives of the RGF;

 A coherent commercial narrative of the proposal that is clear on the key risks and how they will be mitigated;

 Provision of evidence to demonstrate that the proposal is unlikely to go ahead without RGF support;

 Value for money;

 Provision of evidence to demonstrate that the proposal fits with the economic priorities of the area as a whole.

4.24 Successful bids will receive funding either by grant or repayable loan.

Implications of the above changes and announcements for this study

4.25 In the short to medium term, PPS4 will continue to provide the policy framework against which the soundness of Local Development Plans is assessed. Key issues from PPS4 are set out below and it could be that some of the issues are principles which will be taken forward:

4.26 Local authorities must prepare local economic assessments and economic visions, and are given clearer guidance on the tools they should use to promote economic development including CPO, AAPs, Local Development Orders, Simplified Planning Zones and Article 4 Directions

4.27 New criteria on all planning applications for economic development, to include CO2 emissions, accessibility and economic and physical regeneration impact

4.28 The needs test for planning applications for town centre uses has been removed in PPS4, and, although it is in any event an implicit requirement through the impact test which has been strengthened, it is now proposed to be explicitly reintroduced by the new Government.

4.29 The emphasis of the above points remains unchanged. In terms of the requirements that PPS4 places upon local authorities in developing the evidence base to support their development plan policy, the following is required:

4.30 Local Plans must:

 Assess the detailed need for land or floorspace for economic development, including for all main town centre uses over the plan period

 Identify any deficiencies in the provision of local convenience shopping and other facilities which serve day-to-day needs

 Define a network (the pattern of provision of centres) and hierarchy (the role and relationship of centres in the network) of centres

 Assess the capacity of existing centres to accommodate new town centre development taking account of the role of centres in the hierarchy

 Identify centres in decline where change needs to be managed

 Consider setting floorspace thresholds for the scale of edge-of-centre and out-of-centre development which should be subject to an impact assessment and specify the geographic areas in which these thresholds will apply

 Set out the number and scale of leisure developments proposed taking account of their potential impact.

4.31 All references to regional planning will no longer be relevant. This has the following impacts:

 PPS4 requires that the Regional Spatial Strategy should define the network and hierarchy of centres for the region. This strategic approach to defining a spatial hierarchy through the RSS is no longer required under the changes described above. The Government is, however, clear that local authorities should continue to work together on cross-border issues and that existing regional information and data is still available for use in the preparation of development plans. Whilst it is not clear at this stage what role the LEPs may have in strategic planning issues, it seems increasingly likely that they will have some level of involvement in strategic planning matters.

 We would expect that the Government is likely to encourage authorities to work as sub- regional partnerships and that this may result in the development of further evidence base work which identifies some spatial objectives. Many authorities have already worked together in preparing SHMAs or in preparing Local Investment Plans.

 PPS4 included a requirement for any development of out-of-town centres to be considered through the regional planning process. With this requirement no longer valid, it is still however important that this study makes a recommendation in relation to the development of out-of- town centres, with particular regard to existing centres such as MetroCentre in Gateshead and Teesside Retail Park, in order to provide a strategic perspective which can inform the development of Local Plans.

Summary

4.32 In summary, the key policy drivers shaping the future development of town centres include:

 Contraction in public sector spending which risks undermining levels of demand in town centres across the North East

 Promotion of the localism agenda

 An ever greater emphasis on sustainability, reinforcing the emphasis on town centres as the focus for retail, leisure, office and other activities, and also specific pressures for reducing carbon

 The need to align policies for retail and leisure with the housing agenda,

 A move away from regional working but a requirement to work collaboratively across local authority boundaries;

 The establishment of new delivery vehicles such as Tax Increment Financing that can be used to help support retail development schemes.

5.0 Retail Capacity Modelling Basis of the Retail Forecasts

5.1 In agreement with One North East, we have prepared retail forecasts for 15 town centres in the region which represent the largest major regional centres and a geographical spread of other significant lower order centres as follows:

 Newcastle

 MetroCentre

 Middlesbrough

 Darlington

 Sunderland

 Durham

 Stockton-on-Tees

 Redcar

 Hartlepool

 South Shields

 Washington

 Bishop Auckland

 Ashington

 Peterlee

 Berwick-upon-Tweed

5.2 We have also prepared retail forecasts for two groups of out-of-centre retail parks and superstores; viz. those in and north of the City of Durham (including Tyneside and areas further north), and those to the south including Teesside, Darlington, Hartlepool and south Durham. They were grouped in this way to reflect the two principal sub-regions, viz. Tyne and Wear, and Teesside. Each group includes all the retail parks and superstores which were individually identified in the results of the household interview surveys of shopping patterns. Thus it includes large retail parks of sub-regional significance such as Team Valley Retail World and Teesside Shopping Park, smaller retail parks, and a number of individual retail warehouses and food/non-food superstores. However, it does not include individual retail warehouses and superstores which were not identified in the results of the household interview surveys.

5.3 For the retail forecasting in this report, we have used our RECAP retail capacity forecasting Model, as we now use for all such retail studies. The RECAP Model is an empirical ‗step by step‘ model, based on the results of recent household interview surveys of shopping patterns in the region, as its method of allocating retail expenditure from catchment zones to shopping destinations. It is therefore not a theoretical gravity model, but is based on consumer

responses about actual shopping patterns. It is also a growth allocation model; which allocates growth in expenditure to shopping destinations based on shopping patterns indicated by the household interview surveys, and informed professional judgements about how these will be likely to change in the future as a result of potential new retail developments.

5.4 The RECAP Model as used in this regional study provides estimates of the current comparison goods sales in each shopping destination modelled. It therefore provides a picture of the balance of such trade between the principal shopping centres and out-of-centre retail parks in the region, thus illuminating the relationships between them. Whilst it also provides forecasts of the capacity for additional comparison goods retail floorspace in each of the above centres, these are necessarily in broad terms in a regional study such as this. This report does not replace the need for local level evidence but instead supplements and provides the regional context for local level studies. Local retail studies undertaken for individual local planning authorities will provide more detailed and robust forecasts (provided that they are soundly based on well-designed and up-to-date household interview surveys of local catchment areas, and are up-to-date in all other respects).

5.5 Later retail studies which take account of the recent recession will be likely to include more realistic (i.e. lower) expenditure growth forecasts than those based on the high growth trend from the years immediately preceding the recession. This is an important reason why the retail capacity forecasts in this report are likely to be lower than those in local retail studies undertaken before the recession. Our forecasts also take account of the accelerating growth of internet shopping in recent years, which is unlikely to have been taken as fully into account in past local retail studies. Again, this helps to explain why our retail capacity forecasts are likely to be lower than those in local retail studies of a few years ago.

5.6 In accordance with our terms of reference, the retail forecasts in this report are for comparison goods only3. This is because convenience goods shopping is much more localised, and has much less of a regional dimension to it. As used in this study, the RECAP Model forecasts the expenditure-based capacity for additional comparison goods retail floorspace in the following way:

5.7 Calculate the total amount of comparison goods expenditure which is available within the 10 zones comprising the catchment area;

5.8 Allocate the available expenditure to each town centre modelled, and to the principal non- central retail parks and superstores in the region (whilst reserving a proportion for the other shopping centres and stores in the region which are not included in the Model), based on the results of the 2009 and 2010 household interview surveys of shopping patterns; so as to obtain estimates of current sales and forecast future sales in each;

5.9 Compare the estimated sales in each town centre with existing floorspace; so as to assess the current trading performance of each shopping destination, and the capacity to support further growth in convenience and comparison goods floorspace;

5.10 In the case of Newcastle City Centre and MetroCentre, and the northern group of retail parks and superstores, assess likely future changes to the indicated patterns of market shares to take account of potential major retail development in the city centre; and recalculate the sales and capacity forecasts.

3 In this report, comparison goods are as defined in Appendix A of the PPS4 ‗Practice guidance‘.

5.11 The RECAP Model (like any other forecasting model of this type) is an exploratory tool, rather than a prescriptive mechanism. Thus the resulting forecasts of quantitative need are not intended as growth targets which must be achieved, or as rigid limits to future growth. Rather, they are a realistic guide to strategic planning in the region.

5.12 When using the retail capacity forecasts as a guide to future planning strategy, it is also important to remember that the further ahead the forecasting date, the less certain the forecast. Thus the forecasts for 2015 and 2020 are more robust than those for 2025 and 2030. In particular for these later dates, we suggest that forecasts such as these should be treated with caution. They indicate only the broad order of magnitude of retail capacity at those dates, if all of the forecast trends occur. There are also particular uncertainties at the present time as a result of the sharp world-wide economic recession and the climate of austerity in Britain in order to reduce the national deficit, for which there is very little precedent in recent years. It is therefore a matter of some conjecture as to how long it will take the economy to recover and at what rate. Furthermore, the long term growth in the use of internet shopping is as yet unknown (although it has to a substantial degree been taken into account in this report); and reinforces the need to revise the retail forecasts well before 2020 (particularly at sub-regional or more local level) by means of new and detailed forecasts, as we advise later in this report. Principal Data Inputs

Catchment Area

5.13 For this report, we have defined a 10-zone catchment area, based on postcode geography. It is slightly larger than the region, because of the postcode boundaries. A map of the catchment area showing the 12 zones is included in Appendix 3. This catchment area includes almost all of the area from which town centres in the region are realistically likely to attract significant retail expenditure. However, for those centres close to the edge of the catchment area (and for Newcastle City Centre and MetroCentre), we have allowed for inflow of visitor expenditure from outside this area, as described below.

Catchment Population

5.14 The starting point for the population forecasts was a report, dated September 2010, from Pitney Bowes on the current and projected future population of each catchment area zone. They cover the period up to 2020; and we have therefore extrapolated them to 2025 and 2030 by trend projection. These projections by Pitney Bowes include moderate growth of population in the region. We have compared the Pitney Bowes data with experimental projections developed by the North East Regional Information Partnership (NERIP) dated 15 July 2010 supplied to us by ONE North East. These show a lower rate of growth for the region than the Pitney Bowes forecasts. We have therefore reduced the latter to bring them approximately into line with the NERIP forecasts.

5.15 The result is that for the catchment area as a whole the population is expected to increase from 2,610,949 in 2010 to 2,664,192 by 2030, which is an increase of 53,243, or 2.0% over this 20 year period. Population growth by zone is set out in RECAP Model Table 1 in Appendix 3.

Forecasting Dates

5.16 We have prepared base year estimates of retail sales in each shopping destination as at 2010. For the future, we have prepared forecasts for 2015, 2020, 2025 and 2030.

Forecasting at 5 year intervals is recommended in PPS4.

Price Basis

5.17 All monetary values in this report are in constant 2009 prices, unless otherwise stated, so as to exclude the effects of price inflation.

Per Capita Expenditure

5.18 For this Study, we obtained average per capita expenditure in 2009 on comparison goods in the catchment area. Before deducting expenditure on special forms of trading, the figure for 2009 was £2,327. This base figure in 2009 is set out in RECAP Model Table 2 in Appendix 3. Table 2 also indicates the breakdown of it into the eight different categories of comparison goods expenditure covered by questions in the household interview surveys 2009 and 2010.

5.19 The base figure for the year 2009 in Table 2 has been increased to allow for expected growth over the period 2009 to 2030. These increases are based on the national average forecasts by Oxford Economics set out in Tables 6.2 and 6.4 of ‗Retail Expenditure Guide 2010/11‘ by Pitney Bowes, September 2010, and are thus compatible with the 2009 figure. Oxford Economics‘ forecasts are for the period 2009 to 2020, including each intermediate year. They take account of the recent recession, and forecast slow but accelerating growth in the next few years. For our forecasting dates of 2025 and 2030, we have applied Oxford Economics‘ forecast growth rate for the shorter period 2009 to 2020 (3.8% pa), as we consider that this is realistic for the longer period also.

5.20 Oxford Economics has also prepared forecasts of growth in per capita expenditure in the North-East region over the period to 2020. These indicate growth at roughly two thirds of the national average rate. These are of course only Oxford Economics‘ opinion of likely growth in the region, and have no more force than that. We consider that this may be overly pessimistic, and have therefore assumed that the region will achieve national average growth in per capita expenditure (as is conventional in retail studies). However, if this is not achieved, the expenditure-based capacity for new retail floorspace in the region will be less than indicated in our retail capacity forecasts.

5.21 This national average growth profile indicated the growth rates set out in Table 6.1 and used in RECAP Model Table 2. We consider that these growth profiles are currently realistic – unless the UK economy suffers a ‗double-dip recession‘, which has not been allowed for by Oxford Economics (or the region under-performs the national average). However, periodic retail forecasts at sub-regional and local level will enable the assumed growth rates to be adjusted as necessary in the light of actual growth in overall per capita expenditure, and the forecasts revised accordingly.

Table 5.1: Average annual growth in per capita expenditure

Period Average Annual Growth Rate

Comparison Goods

2009 to 2010 1.3%

2009 to 2015 3.7% pa

2009 to 2020 3.8% pa

2009 to 2030 3.8% pa

Source: Pitney Bowes/Oxford Economics ‗Retail Expenditure Guide 2010/11‘.

Special Forms of Trading including internet shopping

5.22 We have made deductions from the per capita expenditure figures supplied by Pitney Bowes to allow for expenditure via special forms of trading (SFT). This includes mail order, vending machines, party plan retailing, on-line shopping via the internet or interactive TV, and expenditure at temporary market stalls; and is therefore expenditure not made in retail shops. RECAP Model Table 2 shows the growing deductions which we have made, based on information for the UK published by Verdict Research Limited on growth in internet shopping and forecast trends. Table 6.2 shows Verdict‘s estimates for the proportion of all retail sales in the UK in 2009 accounted for by internet shopping, and its trend-based forecasts for 2014. This shows the proportion of sales taking place via the internet growing substantially over the 5 years to 2014. For some categories of comparison goods, the internet proportion is already substantial and is expected to become much more so. Based on these, we have judged the deductions for SFT shown in RECAP Model Table 2. Our deductions:

 Assume a flattening of the growth trend after 2015 as internet shopping matures;

 Allow for the fact that some internet purchases of comparison goods are sourced and delivered from food/non-food superstores rather than separate warehouses (and should therefore be included in the Model);

 Allow for the fact that internet shopping sales are included in the retail sales densities of some retailers which operate multi-channel retailing;

 Allow for internet shopping to supplant mail order retailing to some degree; but include other SFT apart from the internet, in particular sales from temporary markets such as periodic street markets.

Table 5.2: UK Internet Shopping Estimates and Forecasts

Goods Type Online sales as proportion of all UK retail sales (%)

2009 2014

Music & video 45.5 76.7

Electrical goods 23.8 38.3

Books 18.9 33.7

Homewares 8.7 12.2

DIY & gardening goods 5.2 5.6

Clothing & footwear 6.7 12.2

Furniture & floor coverings 4.1 5.2

Health & beauty 3.2 5.6

Other comparison goods 6.6 12.2

All Comparison Goods 9.5 15.4

Source: ‗e-Retail 2010‘, Verdict Research Limited, April 2010

5.23 The combined effect of the forecast growth in population and in per capita expenditure is that we expect total catchment area expenditure on comparison goods (set out in RECAP Model Table 3 in Appendix 3) to increase by about £6,799m (68%) over the period 2010 to 2030. This compares with growth in total catchment area population of 2% over the period. Thus only a very small proportion (just under 3%) of the growth in catchment area expenditure will be accounted for by growth in population. This means that the comparison goods floorspace capacity forecasts are very insensitive to population growth and much more sensitive to the assumptions about growth in per capita expenditure, particularly in the later part of the forecasting period. The large increase in forecast expenditure on comparison goods, once expenditure growth accelerates, indicates that a need for additional comparison goods retail floorspace in the region will grow substantially to 2030 (particularly in the later parts of this forecasting period). However, this should be reviewed at regular intervals over that period by means of sub-regional or local retail capacity forecasts. In the short term, expenditure growth will be more limited, as discussed above. Shopping Patterns in the Catchment Area

5.24 In September/October 2009, we carried out for Newcastle and Gateshead Councils a detailed household interview survey of shopping patterns in the convenience goods catchment area of both towns. That survey used a sample of 2,024 interviews across 14 catchment zones. Age-related quota samples were also set for each zone that reflected the age profile of

residents of the catchment area. This is because experience elsewhere has increasingly shown that surveys which do not use age-related quota sampling provide results which are heavily biased toward the older age groups, and thus are not representative of the population as a whole. The survey asked (inter alia) questions about shopping habits for 8 different categories of comparison goods, which were closely matched to the COICOP definitions of comparison goods4. For this regional study, we combined the results into two zones, Zones 3 and 4 of the regional catchment area, shown on the map in Appendix 1.

5.25 For the remainder of the region, we commissioned a new household interview survey by telephone of a sample of households, covering Zones 1,2 and 5 to 10 shown on the map in Appendix 1. This survey asked the same questions about shopping habits as the Newcastle- Gateshead survey, thus making the two surveys compatible with each other. This new survey used a sample of 1,507 interviews, which was again based on age-related quotas to ensure representative results. Interviewing took place in May/June 2010. In both surveys, the samples were distributed approximately in proportion to the distribution of population between the postcode sectors or districts comprising the zones.

5.26 The results of these two surveys were merged to form a single dataset of shopping patterns for the 10 zones covering the regional catchment area, with a combined sample of 3,531 households. These merged results are provided in Appendix 2. Interviewing and data processing for both surveys was undertaken by the specialist market research company, Research and Marketing Plus.

5.27 The surveys provide data on the shopping patterns of the residents of the area for each of ten different categories of retail goods, covering food and non-food shopping; and closely matched to the international standard COICOP definitions of retail expenditure. The results identify usage patterns of all the main town centres, retail parks and superstores in the region for comparison goods shopping.

5.28 Using Newcastle City Centre as an example, in RECAP Model Table 5 in Appendix 3, we have combined the results of the survey questions for each of the 8 sub-categories of comparison goods, to provide weighted average market shares of all comparison goods expenditure which are attracted to each shopping destination from each catchment zone; using weights according to the amount of per capita expenditure on each of these 8 sub- categories of comparison goods. The weighted averages are then corrected as necessary as described below, rounded to the nearest integer, and set out in RECAP Model Table 6.

Market Share Corrections

5.29 The household interview survey provides a detailed picture of where the residents of each of the 10 catchment zones do most of their shopping for 8 different categories of comparison goods. The survey results do not directly indicate actual expenditure flows, but are the best available data to use as a proxy for modelling retail expenditure flows from residential areas to shopping destinations. However, like all such surveys, this means that the results cannot be applied uncritically in the RECAP Model. Thus for example, in our extensive experience, such surveys (undertaken by ourselves and by other consultants) tend to over-emphasise comparison goods shopping in large centres, and under-represent it in smaller centres. This is because there are many more users of larger centres than of smaller; so a survey with samples of this size is more likely to interview users of larger centres, thus biasing the results in favour of such centres. Other local factors, such as the nature of a centre or its catchment

4 As now set out in Appendix A of the PPS4 ‗Practice guidance‘.

area or the competition it faces, can also mean that the results of household interview surveys under or over-represent its use for comparison goods shopping. It is therefore sometimes necessary to introduce market share correction factors; so as to transfer expenditure in the Model from one or more locations to others, to balance (or calibrate) the Model and make it represent reality more accurately. This is not uncommon, and has been necessary in this case for the North-East Region.

5.30 These market share corrections do not alter the centres themselves in any way, but are simply a means of calibrating the Model to make it as realistic as possible a representation of actual expenditure flows. Studies which we have undertaken over many years using the same methods have shown that there is a broad relationship between centre size and comparison goods sales density. Thus larger centres normally have higher sales densities than smaller centres (and hence higher shop rental values). This experience has informed our judgements about the market share corrections needed to make the RECAP Model realistically represent sales in each centre.

5.31 By way of example, for Middlesbrough town centre, use of the household interview survey results in the RECAP Model without correction would result in an unrealistically high sales density for the town centre, which would be significantly above the sales density which we would expect from our extensive experience for a town centre of this size and type. We have therefore reduced the survey-indicated market shares for every catchment zone by the market share correction factor of 90% indicated in the header to RECAP Model Table 16 (i.e. we have multiplied them by 0.9 from the no-change default factor of 100%) before rounding to the nearest integer. This correction to the survey-indicated market shares was our professional judgement, in the light of experience with undertaking a large number of such studies over many years. However, it results in a more realistic base year sales density for Middlesbrough Town Centre.

5.32 Conversely use of the survey results for Stockton-on-Tees (for example) without alteration would result in an overall sales density significantly below what we would expect for this smaller town centre. In RECAP Model Table 36 therefore, we have increased the market shares indicated by the survey by a market shares correction factor of 140% (i.e. we have multiplied the survey indicated market shares by 1.4) before rounding. Thus the excess expenditure in Middlesbrough Town Centre shown by the survey has been re-allocated to Stockton-on-Tees (and other smaller centres in some of the surrounding towns), in calibrating the RECAP Model.

5.33 With these calibration corrections, we consider that the RECAP Model realistically represents the current patterns of shopping in the region, and provides a reliable basis for forecasting future shop floorspace capacity in broad comparative terms appropriate to a regional study.

Visitor Expenditure from outside the Catchment Area

5.34 The household interview surveys covered the wide area shown on the map in Appendix 1. However, some of the centres modelled are close to the boundary of this area (Darlington, Middlesbrough, Stockton-on-Tees, Redcar and Berwick-upon-Tweed). It is highly likely that these town centres will attract some expenditure from outside the catchment area covered by the household interview surveys. This is not likely to be great, because to the immediate south of the catchment area the population is small (owing to the North York Moors and the Yorkshire Dales); whilst to the North of Berwick-upon-Tweed the population is also small in the Borders area of Scotland. However, we have allowed for inflow of visitor expenditure from outside the catchment area in the case of the five centres indicated above. These allowances

are our professional judgements, in the light of the local patterns of settlements and communications.

5.35 Newcastle City Centre is the dominant retail centre in the region and the regional capital. As such, it is likely to attract some comparison goods expenditure from outside the region even though it is not located close to its edge. We have therefore made a small allowance for visitor expenditure in the city centre. We have also made a small allowance for visitor expenditure in MetroCentre, as it is the only free-standing regional shopping centre in the region, and is located just off the A1 road; and in Durham, which is a regional attraction for visitors.

Existing Shop Floorspace

5.36 We have obtained details of existing shop floorspace in each of the 15 town centres from Experian Goad. The information is at various dates in 2009 and 2010, according to the dates when Experian last re-surveyed the centres. It is therefore after the worst of the recession and reasonably up-to-date. The information has been analysed to exclude convenience goods shops, and other Class A1 shops which are not currently used for comparison goods retailing (e.g. beauty salons, sandwich bars and travel agents). Vacant shops have also been excluded so as to ensure compatibility in the RECAP Model between the shopping patterns indicated by the household interview survey and the occupancy of the shops; and because most are small units in the more secondary shopping locations in each centre. However this means that vacant shops in some of the town centres might have the potential to absorb some of the forecast capacity for additional comparison goods retail floorspace.

5.37 The two groups of retail parks and superstores each comprise a large number of stores. It is not necessary for a regional study such as this to know full details of their floorspace and occupancy in order to assess their importance within the region in trading terms. It is also impractical within cost and time constraints to obtain up-to-date information on floorspace and occupancy for such a large number of stores. We have therefore simplified our retail forecasts for these two groups, limiting the analysis to estimating current sales and trading importance vis-a-vis the town centres, and the broad order of magnitude of future growth potential. However we also comment on the implications for retail parks and superstores of applying the sequential approach of PPS4 so as to direct future growth to town centre and edge-of-centre sites in preference to further growth of out-of-centre retailing.

Sales Densities

5.38 Base year (2010) sales densities result from dividing estimated sales in each centre by its net retail sales area. Thereafter, we have allowed for sales densities of existing floorspace to rise at 1.5% pa from 2010. In the context of growth in per capita expenditure of 3.8% pa, this allocates a substantial proportion (about 40%) of growth in expenditure to existing shops, before new retail floorspace is supported. This helps to support existing retailers, and reduce the impact on them of new retail development. The balance between growth in per capita expenditure and growth in sales from existing floorspace is critical to the resulting forecasts of the capacity for new floorspace.

5.39 In principle, this balance is an important guide to planning policy for new retail development. However if insufficient new retail attractions are provided in a town centre as expenditure grows, shoppers will increasingly move to other accessible town centres where new retail development has occurred. It is therefore potentially damaging to town centres to weight the balance too far in favour of existing floorspace, even though ostensibly that might appear to

be the best way of protecting its future vitality and viability. It is shops which attract shoppers; and town centres which are able to grow their retail attractions with well designed and integrated new town centre developments, are those which win the competitive battle in the long term – to the benefit of both the pre-existing and new retailers and service businesses.

5.40 Committed Developments

5.41 We have not included in the RECAP Model new retail developments which were already committed but not yet implemented. It is not practicable (or necessary) to do so in a regional study of this nature. They will also be subject to a significant degree of change over time in 15 centres and two groups of out-of-centre retail parks and superstores. Excluding them from the Model means that such developments should be subtracted from the retail capacity forecasts, to arrive at forecast capacity for further new retail floorspace thereafter.

5.42 In doing so, adjustments should be made to account for any differences between the likely sales density of the committed developments, and that allowed for in the RECAP Model for new retail floorspace. Thus for example in Darlington town centre new comparison goods retail floorspace has been assumed to trade at £5,386 per sq m net in 2015, leading to a capacity forecast of about 4,400 sq m net at that date. However, if new floorspace is to be provided in a new superstore, in which comparison goods floorspace would achieve a sales density of, say, £7,500 per sq m net, the forecast capacity for such floorspace would be only about 3,160 sq m net (i.e. 4,400 x 5,386/7,500). Development Scenarios Assessed

5.43 We have assessed two scenarios for new comparison goods retail development in the region. Scenario 1 makes no specific allowances for any particular new retail developments. Scenario 2 tests the implications of a potential major new comparison goods retail development in Newcastle City Centre; in accordance with the RSS policy of restraining growth of MetroCentre and directing growth in expenditure to Newcastle City Centre instead. The scenarios are as follows:

Scenario 1: The ‗baseline‘ scenario, which assumes that throughout the region there will be no change in the patterns of market shares of catchment area comparison goods expenditure indicated by the results of the household interview surveys (as corrected) over the forecasting period to 2030. The implicit assumption is that the additional attractions from new retail developments in different towns will balance each other out across the region.

Scenario 2: In this scenario, we assume that there will be a major new comparison goods retail development in Newcastle City Centre opening by 2020; which will increase the city centre‘s market share of catchment area comparison goods expenditure from that date onwards. This will be coupled with a reduction in the market share of expenditure attracted by MetroCentre (and a small impact on the northern group of retail parks and superstores), as some of the growth in expenditure is transferred from MetroCentre to Newcastle City Centre.

5.44 Scenario 1 is somewhat artificial because it is unlikely (even excluding major development in Newcastle City Centre) that new retail development will be evenly balanced across the region over the next 20 years. However, it is not possible to know over such a long period and such a large number of town centres exactly where new retail developments will occur, or of what types and sizes, and at what dates. Bearing in mind that this is a regional study, and that the retail forecasts are exploratory at the strategic rather than local level, we consider that Scenario 1 is a realistic starting point.

5.45 As and when detailed development proposals come forward in individual town centres, it will be possible to assess their effects on retail capacity at local level. Thus for example, a substantial new retail development in one of the town centres would be likely to increase that centre‘s market share of catchment area expenditure. It would thus be partly self-justifying in terms of attracting expenditure; with the result that a larger amount of floorspace than indicated by retail capacity forecasts based on constant market shares would be supportable. Conversely, it would also be likely to reduce the market shares of catchment area expenditure attracted by nearby competing centres, in which there were no balancing new retail developments. This would mean that future retail capacity in those affected centres would be less than indicated by the forecasts based on constant market shares.

5.46 Scenario 2 deals with the particular circumstance in Newcastle, where for some time the Council has been working towards a major new comparison goods retail development in the East Pilgrim Street area. This scenario was selected as the proposed East Pilgrim Street development is the largest proposed retail development in the region and is of a significant scale at a national level. It also means that this regional study is compatible with our recent report ‗Newcastle-Gateshead Retail Studies: Strategic Comparison Goods Retail Capacity Forecasts‘, prepared for Newcastle and Gateshead Councils.

5.47 We have not modelled a separate scenario of transfer to town centres of capacity which has (in Scenarios 1 and 2) been forecast as non-central. This is because there could potentially be too many options for locating such capacity to make such a forecasting scenario practicable. Further, only some of the town centres will be likely to have sites which could be made available to accommodate additional town centre or edge-of-centre development supported by transfer of growth from out-of-centre retailing. However, we comment below on the implications for Middlesbrough and Darlington town centres of locating in those centres in accordance with the sequential approach, some of the capacity which has been forecast for the southern group of non-central retail parks and superstores.

Format of the RECAP Model Tables

5.48 The RECAP Model Tables are set out in Appendix 3. Tables 1 to 4 set out the population and expenditure forecasts for the catchment area. Table 3 indicates the total available convenience and comparison goods expenditure which is forecast to be available in each zone at each date. Table 4 indicates for each zone the total available expenditure in the base year of 2010 on each of the 8 sub-categories of comparison goods.

5.49 Tables 5 to 9 are the Scenario 1 tables for Newcastle City Centre. Table 5 shows the pattern of market shares of expenditure on each category of comparison goods attracted from the catchment area, as indicated by the household interview surveys before correction. Table 6 shows the corrected market share patterns for comparison goods expenditure in the city centre. Tables 7 and 8 show the amounts of expenditure on each comparison goods sub- category attracted, and the amounts of all comparison goods, respectively. Table 7 is the product of Table 4 and Table 5; whilst Table 8 is the product of Table 3 and Table 6. Table 9 brings together the expenditure attracted and existing floorspace, to arrive at the retail capacity forecasts for the city centre in Scenario 1. It also shows the overall market shares of total catchment area expenditure on comparison goods which are estimated to be attracted by the city centre.

5.50 The Scenario 1 tables for the 13 other town centres modelled and for MetroCentre follow the same format as those for Newcastle City Centre. A similar format also applies to the Scenario 1 tables for the two groups of principal retail parks and superstores. However, as indicated

above, in this case the existing retail floorspace and sales densities are not included; on the assumption that averaged over such a large number of retail parks and superstores, current trading levels represent a realistic ‗benchmark‘ or ‗equilibrium‘ level of trade.

5.51 The RECAP Model tables for those locations included in Scenario 2 are simpler. The Scenario 2 tables are Tables 90 to 92 for Newcastle City Centre, Tables 93 to 95 for MetroCentre, and Tables 96 to 98 for the northern group of retail parks and superstores. Thus for example in Scenario 2, Table 90 shows the revised comparison goods market shares from 2020 onwards as a result of a potential major new comparison goods retail development in Newcastle City Centre. Table 91 is the product of Table 3 and Table 90. Table 92 shows the revised retail capacity forecasts for the city centre and increased overall market shares of expenditure attracted from the catchment area, under the Scenario 2 assumptions. A similar arrangement of tables applies to MetroCentre and the northern group of retail parks and superstores.

5.52 The RECAP Model retail capacity forecasts are completed by summary Tables 99 to 101. Table 99 shows the (corrected) market shares attracted in 2010 by all the retail destinations modelled in the region for each of the 8 comparison goods categories. This provides the basis for the retail sector analysis described later in this report. Tables 100 and 101 show the patterns of combined market shares (as corrected) for all comparison goods, attracted by the town centres and non-central retail parks and superstores together in the region, under Scenarios 1 and 2 respectively. Table 101 for Scenario 2 shows how these combined market shares are expected to increase from 2020, as a result of a potential major new retail development in Newcastle City Centre.

5.53 Tables 100 and 101 also indicate the combined market shares attracted by all the other (smaller) town, district and local centres, and individual retail warehouses and foodstores, which are not included in the RECAP Model. This is simply the difference between 100% and the combined market shares for the retail locations which have been included. Thus for example, Table 100 shows that the 15 centres and two groups of retail parks and superstores together currently account for about 82.7% of all available comparison goods expenditure in the regional catchment area. The large number of other centres and stores therefore together account for only about 17.3%. This has substantial implications at the sub-regional level for new retail development, as discussed later in this report.

Results of the Retail Forecasts

Performance of Existing Centres and Non-central Retailing

5.54 In this section, we describe the results of our comparison goods retail estimates and forecasts for the North-East Region. Using the RECAP Model, for each town centre, for MetroCentre, and for the principal retail parks and superstores, we have estimated comparison goods sales and market shares in 2010. Together with the comparison goods floorspace in each, these are shown in Table 5.3. The sales estimates are also shown graphically in Graph 5.1.

Table 5.3: Comparison Goods Floorspace, Sales and Market Shares in 2010

Location Existing Estimated Estimated Comparison Goods Comparison Comparison Floorspace (1) Goods Sales Goods Market (sq m net sales) (£m) Share (2) Newcastle City Centre 189,245 965 16.9% MetroCentre 147,096 673 12.0% Middlesbrough Town Centre 83,767 396 6.8% Darlington Town Centre 56,926 239 3.5% Sunderland City Centre 64,275 306 5.5% Durham City Centre 20,130 105 1.8% Stockton-on-Tees Town Centre 42,465 132 2.3% Redcar Town Centre 21,039 71 1.2% Hartlepool Town Centre 28,335 100 1.8% South Shields Town Centre 25,712 103 1.9% Washington Town Centre 17,805 86 1.6% Bishop Auckland Town Centre 31,569 108 2.0% Ashington Town Centre 14,263 56 1.0% Peterlee Town Centre 12,932 45 0.8% Berwick-upon-Tweed Town Centre 15,030 53 0.7% Principal retail parks & superstores (north) n/a 774 14.0% Principal retail parks & superstores (south) n/a 524 9.0% Other centres and stores in the region n/a n/a 17.2% Source: RECAP Model

Notes: (1) Includes estimated comparison goods floorspace in food superstores located within the Goad plan areas.

(2) Proportion of total catchment area expenditure attracted.

This table may include very marginal underestimation of sales and market shares for Middlesbrough, Darlington, Redcar, South Shields, Washington, Bishop Auckland, Ashington and Peterlee, which all include food/non-food superstores within the Goad plan area, and very marginal over-estimation of sales and market shares for the principal retail parks and superstores; owing to the way in which small numbers of respondents to the household interview surveys were coded as having answered the questions in relation to use of superstores.

Graph 5.1: Comparison Goods Sales in 2010

Source: RECAP Model

5.55 A number of important findings are apparent from Table 5.3. First, Newcastle City Centre is the largest single retail centre in the region, by a wide margin. Its nearest rival is MetroCentre, with sales of almost 70% of those in the city centre. The City Centre and MetroCentre together attract almost 30% of all comparison goods expenditure in the region.

5.56 Second, centres on Tyneside and Wearside together attract a substantially greater combined market share than those on Teesside and in south Durham. Newcastle City Centre, MetroCentre, Sunderland City Centre, South Shields Town Centre and Washington together attract over one third (37.9%) of all comparison goods expenditure in the region. In contrast, Middlesbrough, Darlington, Stockton-on-Tees, Redcar, Hartlepool and Bishop Auckland Town Centres together attract a combined market share of only 17.6% of all comparison goods expenditure in the region. This is partly a reflection of the greater concentration of population on Tyneside and Wearside, than on Teesside and in south Durham. The former sub-region accounts for 50.1% of the region‘s population (Zones 2, 3, 4 and 5); whilst the latter accounts for 31.6% (Zones 7, 8 and 9). However, even allowing for inflow of visitor expenditure to Middlesbrough, Stockton-on-Tees, Redcar and Darlington from outside the region, their sales

levels are disproportionately low, compared with those of the centres on Tyneside and Wearside.

5.57 Third, the principal retail parks and superstores are now almost as important in retail terms as Newcastle City Centre and MetroCentre combined. The northern group of principal retail parks and superstores has sales and a market share approaching those of Newcastle City Centre; whilst the southern group has sales and a market share approaching those of MetroCentre (and almost the same as Middlesbrough and Stockton-on-Tees town centres combined). Most of these retail parks and superstores are out-of-centre, so this trade has been lost to town centres in the region (although because of constraints on site availability, it would probably not have been possible to have fitted into the town centres sufficient new floorspace to absorb that level of trade). Relative to the town centres in the sub-region, the southern group of retail parks and superstores accounts for a somewhat greater proportion of trade than does the northern group. This partly explains why the southern town centres (apart from Middlesbrough) are performing less well than some in the north.

5.58 The figures for the principal retail parks and superstores include only those which were specifically mentioned by respondents to the household interview surveys. They exclude many individual retail warehouses, some small retail parks, and some out-of-centre superstores and large supermarkets. The overall picture for out-of-centre retailing in the region is therefore of even greater sales and market share than is indicated by Table 5.3 and Graph 5.1.

5.59 Fourth, apart from Newcastle City Centre, MetroCentre, Middlesbrough and Darlington Town Centres, and Sunderland City Centre, all the other town and city centres included in the RECAP Model are relatively insignificant in regional terms. None has a market share greater than 2.3%, and most have market shares between 0.7% and 2.0%. However, they are of course important within their local catchment areas.

5.60 Fifth, most of the town, district and local centres in the region which are not included in the RECAP Model are even less significant in regional terms. Together with the individual out-of- centre retail warehouses and foodstores not included in the Model (and with leakage of expenditure to shopping destinations outside the region) they jointly account for only 17.2% of all comparison goods expenditure in the regional catchment area. Again however, each is likely to be important to residents of its immediate local catchment area. Although they are not included in the RECAP Model, the Model implicitly allows for growth in expenditure at these locations at the same rate as for the town centres modelled. Thus their capacity for future growth, albeit on a small scale because of their small size, is protected in these forecasts. As with the larger centres, if some of the capacity forecast as non-central was instead developed at these locations in the form of town and district centre or edge-of-centre shops and stores in accordance with the sequential approach, their growth potential would be increased.

5.61 The foregoing shows that in hierarchical terms, Newcastle City Centre is clearly at the top, as a major regional centre. Whilst not a town centre, MetroCentre is clearly a shopping centre of regional status. Second level centres are Middlesbrough, Darlington and Sunderland, each of which is of sub-regional status and importance. Below these, the next group of centres comprises Durham, Stockton-on-Tees, Redcar, Hartlepool, South Shields, Washington and Bishop Auckland town centres. Ashington, Peterlee and Berwick-upon-Tweed and other comparable centres are of more local significance within their immediate catchment areas. Finally, the many small town, district and local centres not explicitly included in our analysis

would lie at the lowest levels in the hierarchy.

5.62 Overlaying such a hierarchy would be the non-central retail parks and superstores. As indicated above, these now attract very substantial trade. The largest, e.g. Team Valley Retail World in Gateshead, retail parks and Tesco Extra superstore at Kingston Park in Newcastle, Silverlink Retail Park in Wallsend, North Tyneside, and Teesside Shopping Park near Stockton-on-Tees are now of sub-regional significance. Some attract more comparison goods expenditure than medium sized town centres.

Table 5.4: Town Centre Sales Densities in 2010

Location Comparison Goods Superstores Included (1) Sales Density (£ per sq m net sales) Newcastle City Centre 5,098 MetroCentre 4,576 Middlesbrough Town Centre 4,727 Sainsburys Darlington Town Centre 4,199 Sainsburys Sunderland City Centre 4,767 Durham City Centre 5,201 Stockton-on-Tees Town Centre 3,107 Redcar Town Centre 3,353 Morrisons Hartlepool Town Centre 3,535 South Shields Town Centre 4,003 Asda Washington Town Centre 4,858 Sainsburys & Asda Bishop Auckland Town Centre 3,425 Morrisons & Asda Ashington Town Centre 3,934 Asda Peterlee Town Centre 3,497 Asda Berwick-upon-Tweed Town Centre 3,514 Source: RECAP Model

Notes: (1) Estimated comparison goods floorspace in these superstores included in the sales density calculation.

5.63 Table 5.4 shows the comparison goods sales densities which each town centre and MetroCentre are estimated to be achieving in 2010. It indicates that some town centres are performing better than others of similar size. Town centres which include one or more food superstores would be expected to achieve a higher sales density than those which do not; because sales densities for the comparison goods floorspace in food/non-food superstores are substantially above those found in almost all town centres. A superstore in a town centre therefore should have the effect of increasing the average comparison goods sales density of the town centre as a whole including the superstore. The smaller the town centre, the greater should be this effect; because the comparison goods floorspace in the superstore would form a higher proportion of total town centre comparison goods floorspace.

5.64 With the foregoing in mind, Table 5.4 indicates that Stockton-on-Tees and Redcar town centres are performing particularly poorly, relative to the other centres. This is not surprising. Stockton-on-Tees is over-shadowed by the much larger Middlesbrough Town Centre; and has the large Teesside Retail Park close by. Redcar is also over-shadowed by Middlesbrough; and as a coastal town near the mouth of the Tees estuary, has a limited local catchment area and population.

5.65 Other centres which appear to be performing somewhat poorly are Bishop Auckland and Peterlee. These both have only modest sales densities, particularly since the former includes two food/non-food superstores, and the latter one. Bishop Auckland has to compete with Durham to the north and Darlington to the south, which means that it has a limited catchment area. Peterlee is a coastal town, which limits its catchment area. Hartlepool, Ashington and Berwick-upon-Tweed appear to be performing moderately.

5.66 For its size, Darlington Town Centre appears from the household survey results to be performing relatively modestly, compared with the other larger centres, even allowing for inflow of visitor expenditure (estimated as accounting for 20% of total sales) from outside the regional catchment area. Darlington has to compete with the much stronger centre of Middlesbrough to the east, together with its own retail parks and those to the east on Teesside. Despite this, our inspections have found the centre to be trading busily and the survey indicates that the centre out-performs (in terms of trading density) 3 of the other major centres. Bishop Auckland, Newton Aycliffe and smaller towns to the north also compete and account for some of the expenditure of south Durham residents.

5.67 Durham City Centre is a particularly strongly performing centre, which appears to be ‗punching above its weight‘, achieving a high sales density of £5,201 per sq m net. This is probably due to the presence of the cathedral and castle, the historic environment of the city centre, and the long-established University, which together enable it to attract occasional shoppers from a wide area. Sunderland City Centre also appears to be performing reasonably well, despite its proximity to Newcastle City Centre and MetroCentre and its coastal location i.e. having a limited catchment area. Refurbishment and extension of The Bridges Centre some years ago, together with other new attractions, has helped to maintain the city centre‘s trading performance.

5.68 South Shields and Washington are both shown as performing well for their size. Both have had new investment in their centres in recent years, which has helped to retain shoppers.

Forecast Capacity for Additional Comparison Goods Retail Floorspace

5.69 In addition to using the RECAP Model to estimate the current retail performance of the existing centres and non-central retailing, we have used it to prepare forecasts of the expenditure-based capacity for additional comparison goods retail floorspace, over the period to 2030. As indicated earlier in this report, these forecasts are necessarily of a broad strategic nature, and are not intended to be used as the sole source of retail evidence for decisions on individual planning applications. In Table 5.5, we summarise the forecasts, and in Graph 5.2 we illustrate the Scenario 1 forecasts for 2030 graphically. They are cumulative, i.e. the forecasts for each date include the forecasts for the previous dates and are not additional to those earlier forecasts.

Table 5.5:

Summary of COMPARISON GOODS Capacity Forecasts (sq. m. net sales area)

Scenario/Location 2015 2020 2025 2030 RECAP Model Table (Appendix 3) Scenario 1: Newcastle City Centre 15,500 40,800 66,300 96,100 9 MetroCentre 10,600 28,000 45,400 65,800 14 Middlesbrough Town Centre 6,400 16,900 27,400 39,700 19

Darlington Town Centre 4,400 11,400 18,400 26,800 24 Sunderland City Centre 4,100 11,200 18,200 26,300 29 Durham City Centre 1,700 4,500 7,400 10,700 34 Stockton-on-Tees Town Centre 2,600 6,900 11,100 16,100 39 Redcar Town Centre 1,200 3,200 5,100 7,400 44 Hartlepool Town Centre 2,000 5,300 8,500 12,400 49 South Shields Town Centre 1,500 4,100 6,600 9,500 54 Washington Town Centre 1,400 3,800 6,200 9,000 59 Bishop Auckland Town Centre 2,200 5,700 9,300 13,500 64 Ashington Town Centre 1,100 2,800 4,600 6,700 69 Peterlee Town Centre 800 2,100 3,400 4,900 74 Berwick-upon-Tweed Town Centre 1,000 2,700 4,400 6,400 79 Principal retail parks & superstores 84 (north) 23,300 53,600 83,100 115,500 Principal retail parks & superstores 89 (south) 16,500 38,000 59,200 82,400 Scenario 2: Newcastle City Centre 15,500 74,800 103,900 138,100 92 MetroCentre 10,600 11,200 26,800 45,200 95 Principal retail parks & superstores (north) 23,300 45,500 74,300 105,600 98 Source: RECAP Model (Appendix 3) rounded to the nearest 100sq m net. Notes: The forecasts are cumulative, i.e. the forecasts for each date include the forecasts for the previous dates and are not additional to those earlier forecasts. Committed retail developments are not included in the RECAP Model, and should be subtracted from these capacity forecasts (after adjusting for any differences in sales density as described in the text). Assuming a net to gross ratio of 75% for new retail floorspace in the town centres, the gross floorspace equivalent for the town centres would be about 1.33 times the net retail sales areas forecast above. In the case of retail parks and superstores, net to gross ratios vary, being generally higher for retail warehouses than for food/non-food superstores. A working average between them would be about 80%, meaning that on average the gross floorspace equivalent for the retail parks and superstores combined would be about 1.25 times the net retail sales areas forecast above.

Figure 5.2: Scenario 1 Comparison Goods Retail Capacity Forecasts for 2030 (sq. m. net sales area)

Source: RECAP Model.

5.70 The forecasts in Table 5.5 are on the basis that in Newcastle, MetroCentre, Middlesbrough, Darlington, Sunderland and Durham, new floorspace would trade at an average sales density of £5,000 per sq m net in 2010, increasing at 1.5% pa thereafter. In all the other centres, new floorspace has been assumed to trade at £4,500 per sq m net in 2010, increasing at 1.5% pa thereafter. In the case of the two groups of retail parks and superstores, new floorspace has been assumed to trade at £5,000 per sq m in 2010, again increasing at 1.5% pa thereafter. This is a composite sales density for a mixture of retail warehouse parks (which typically achieve average sales densities of around £3,000 to £3,500 per sq m net depending on the occupiers), and comparison goods floorspace in food/non-food superstores (which typically achieves sales densities of around £7,500 per sq m net). The format in which new floorspace is developed will therefore affect the capacity for such floorspace. In the event of proposed developments coming forward which would have different sales densities than those indicated above for new floorspace, the retail capacity forecasts would need to be adjusted to take account of the differences in sales density, as indicated in the previous section of this report. Forecasting Conclusions

5.71 Several important conclusions flow from the retail capacity forecasts in Table 5.5, as follows:

 Taking the region as a whole, there will be growing and eventually very substantial capacity for new comparison goods retail floorspace over the next 20 years. Excluding

the small town, district and local centres and retail warehouses and foodstores not included in the RECAP Model, the total capacity for new comparison goods floorspace by 2030 in the region will be equivalent to almost 4 new MetroCentres, if forecast trends occur.

 If there are no changes in current shopping habits and market shares, most of this growth in floorspace will be needed in the largest centres, and in non-central retail parks and superstores. 72.5% of the forecast capacity in the 15 centres modelled is accounted for by the 5 largest centres (Newcastle, MetroCentre, Middlesbrough, Darlington and Sunderland), under Scenario 1, in which market shares are assumed to remain constant.

 From about 2020 onwards, there will be capacity for large-scale new comparison goods retail developments in Newcastle City Centre, Middlesbrough and Darlington Town Centres and Sunderland City Centre. Because of the long lead times from inception to completion of complex town centre developments, this means that preparations for such schemes should be instigated at an early date, so that they can be completed and let during an expected period of faster economic growth.

 The capacity for additional floorspace in the town centres will be modest in the short term (even if there is no ‗double dip‘ recession – which would reduce the short term forecasts further), particularly in the smaller centres. In almost all the centres, only from about 2020 onwards does capacity start to become substantial, and great enough to justify new town centre developments (other than small-scale incremental growth). Even then in the smaller centres, without significant changes in shopping habits and market shares, there will not be sufficient capacity for new town centre developments of a sufficient scale to achieve a step-change in these centres‘ retail offer to a higher level in the hierarchy of town centres.

5.72 Conversely, even in the short term, substantial capacity for new floorspace has been forecast for the two groups of non-central retail parks and superstores. This poses a potential threat to the town centres. However, If sites can be assembled in and on the edge of existing centres and if the sequential approach of PPS4 is rigorously applied, developing this additional floorspace (forecast as non-central) in and on the edge of town centres (and in town centre format shops and stores), instead of out-of-centre, would result in a substantial boost to the forecast capacity in the town centres. This could mean that the capacity forecast for those town centres which have sites available could be developed earlier than indicated in Table 5.5.

5.73 In Middlesbrough and Darlington town centres (in particular), sites are potentially available for new town centre developments. It would probably be unrealistic to assume that all of the capacity forecast in Table 5.5 for principal retail parks & superstores (south) could be accommodated instead in these two town centres. However, if half could be developed in these centres, with 60% of it in Middlesbrough and 40% in Darlington (i.e. approximately in proportion to the relative capacity forecasts for these two town centres), it would add about 11,400 sq m net to the above forecast for Middlesbrough and about 7,600 sq m net to that for Darlington, in 2020. By 2030, the additions on this basis would be about 24,720 sq m net for Middlesbrough and about 16,480 sq m net for Darlington. Alternatively, the retail capacity forecasts for these town centres in Table 5.5 could be brought forward by about 5 years, if further out-of-centre comparison goods floorspace is halved from that forecast above. It will be for each local authority to decide what is practicable in terms of achieving new town centre

development and preventing unwanted out-of-centre development; and then engaging in positive planning to bring it about.

Retail Sector Analysis for the Region

5.74 The third RECAP Model table in the set of 5 tables for each location in Appendix 3 details (in the bottom row) the overall market share of expenditure on each sub-category of comparison goods which we estimate is attracted in 2010 by that location. For Newcastle City Centre, for example, this is Table 7; and the equivalent table for each of the other locations. Each such table indicates the strengths and weaknesses of the location for the various categories of comparison goods shopping. These tables show that the large and medium-sized town centres are strongest (i.e. have the highest market shares) for clothing and footwear, and for the ‗other comparison goods‘ category; and the lowest for the ‗bulky goods‘ categories of furniture and floor-coverings, domestic appliances, and DIY goods. This is not surprising, as it is these categories of goods which formed the ‗first wave‘ of retail decentralisation to out-of- centre retail warehouses.

5.75 Table 5.6 (and RECAP Model Table 99) summarises these sectoral market shares for the locations modelled, in the region as a whole. Graph 5.3 displays the same information graphically; together with the residual market shares attracted by the small town, district and local centres, etc, which are not included in the RECAP Model.

Table 5.6: Market Shares for Comparison Goods Shopping

Comparison Goods Category Town Centres Principal Retail Totals Modelled Parks & Superstores Clothing & footwear 76.4% 12.5% 88.9% Furniture & floor-coverings 48.6% 37.2% 85.7% Household textiles & soft furnishings 57.2% 27.4% 84.6% Domestic appliances 37.4% 47.8% 85.2% Audio-visual equipment 37.4% 48.5% 85.9% Hardware, DIY goods & garden goods 21.9% 56.7% 78.6% Chemists‘ medical & beauty products 44.3% 13.9% 58.2% All other comparison goods 73.1% 12.3% 85.5% Source: RECAP Model

Notes: The totals may not always equal the sum of the components, owing to rounding.

Figure 5.3: Market Shares by Comparison Goods Category and Location Type

5.76 Several aspects of Table 5.6 and Graph 5.3 are particularly striking:

 The market shares for the town centres modelled and MetroCentre, and those for the principal retail parks and superstores, are virtually mirror images of each other. Thus in the goods categories in which the town centres and MetroCentre are achieving high market shares, the retail parks and superstores are achieving low market shares, and vice-versa.

 For all the goods categories apart from chemists‘ medical and beauty products, and to a much lesser extent, hardware, DIY goods and garden products, the combined market shares of the town centres and MetroCentre and the principal retail parks and superstores, are very similar. This again shows the dominance of these 15 largest centres and principal retail parks in the region for all categories of comparison goods retailing, bar one.

 Shopping for chemists‘ medical and beauty products is the most localised of the comparison goods categories, by a wide margin. This indicates the importance of pharmacies to small town, district and local centres. It means that when planning permissions are granted for any non-central supermarkets or superstores in the region, it will be vital that they are subject to conditions preventing pharmacies in such stores; if there are already pharmacies in nearby town, district or local centres. To do otherwise would be to risk removing from small centres one of the few remaining ‗anchor‘ retail functions, thus undermining their vitality and viability.

 The retail parks and superstores have so far only penetrated the markets for clothing and footwear and for ‗other comparison goods‘ to a limited degree in the region as a whole. The latter goods category includes goods such as books; jewellery; toys; recreational, leisure and luxury goods; gifts; cycles; fashion accessories. This limited market penetration is partly owing to conditions limiting goods which may be sold from many retail parks, to ‗bulky‘ goods. There are pressures across the region (and the country) for relaxations of such restrictions, to permit a wider range of goods to be sold. However, if the vitality and viability of town centres is to be protected and enhanced in the interests of sustainability and social inclusion, it will be vital that such pressures are strongly resisted.

 There is now very little hardware and DIY goods sold from large town centres in the region. Most has now gone to retail parks and free-standing retail warehouses. However, a relatively high proportion is still retained in smaller towns; although not necessarily in their town centres, owing to the wide penetration of DIY goods stores into smaller towns.

 Apart from hardware and DIY goods, decentralisation of electrical goods sales to retail warehouses and superstores in the region is particularly striking. At least until the recession, expenditure on electrical goods has been one of the fastest growing categories of expenditure. This retail warehouse market is dominated by only two companies, Curry‘s and Comet, with a small number of other operators. However, the ‗big four‘ food retailers increasingly sell a wide range of electrical goods from their out-of-centre superstores. Electrical goods retailing from large town centres is now mainly limited to a few specialists; in particular the mobile phone companies, most of which are in all of the town centres modelled, and large department stores (e.g. John Lewis, Fenwick and House of Fraser).

5.77 This profile of market shares for the town centres and for the principal retail parks and superstores is fairly typical. It does not indicate any particular structural weaknesses in the retail offer of the region as a whole. However examination of the market shares achieved by individual town centres (in the detailed RECAP Model tables) shows that most have strengths and weaknesses in different goods categories. Generally, the smaller the centre, the lower its market share for clothing and footwear relative to the other categories – as shoppers prefer to shop in larger centres where there is a greater choice of such goods. These goods account for a relatively high proportion of comparison goods expenditure, so are particularly important to town centres.

5.78 To achieve a step-change to a higher level in the hierarchy of centres, therefore, new town centre development must focus particularly on clothing & footwear, and other fashion and ‗lifestyle‘ goods. This is particularly difficult for small town centres to achieve. It is a ‗chicken and egg‘ problem: fashion goods retailers will not come to small centres because pedestrian footfall is too low to justify the investment, but shoppers will not come to the centre in large numbers because of the lack of such retailers to attract them. This illustrates the difficulty of achieving step-change in small town centres; although more isolated small centres may be able to attract retailers, provided they have adequate local catchment populations. However, in the North-East Region, middle ranking centres such as Darlington and Sunderland do already have sufficient ‗critical mass‘ of retailers and services, and sufficient pedestrian footfall, to attract more retailers, thus potentially making new town centre development a viable proposition. It is much less likely to be viable in the smaller town centres in the region.

6.0 Leisure Analysis Introduction

6.1 This section of the report provides an assessment of the leisure sector in the North East. It reviews market trends, participation levels and the geographical distribution of leisure facilities and provides a gap analysis for each key centre to highlight possible requirements for strategic planning purposes. Our analysis has focussed upon the following sub categories of the leisure sector:

 The Licensed Retail Sector

 The Hotel Sector

 Cinemas

 The Evening Economy

 Health and Fitness

 Bingo

 Other leisure attractions, e.g. theatre, galleries, heritage, indoor bowling, casinos

6.2 These sub categories are in line with the main uses to which PPS4 town centre policies apply.

6.3 In assessing the existing and potential leisure market within the region we have undertaken the following analysis:

 Written to operators requesting their views on the leisure market within the region

 Used property databases to identify published requirements

 Reviewed our internal database of market activity within the leisure sector

 Assessed the market in order to identify trends Undertaken a gap analysis to identify areas where there may be scope to expand across the sector

 Reviewed CACI‘s regional profile of participation in sport and leisure in the North East for 2010

6.4 We have not modelled capacity for leisure floor space as we do not consider that it is possible to do so with any degree of accuracy as the market is volatile and participation and spending in the leisure sector does not follow predictable trends in the way that food retailing and (to a lesser degree) comparison retailing do.

6.5 Leisure expenditure is a ―voluntary spend‖ and far more prone to be affected by a downturn in the economy than expenditure on food for the home or consumer durables. It is therefore difficult to assess the true indicators of future demand or need. Often, however, it is useful to consider the potential gaps in provision by looking at its distribution across the study area.

6.6 Quantifying the demand for leisure provision is also more difficult to assess in comparison with retail space. In addition to the voluntary nature of the spend, other factors can change the attraction of the market other than just consumer expenditure. For example, changes to the delivery of film media using 3D, the product itself – blockbuster movies and their ability to

attract the audiences – can create greater demand than has been anticipated in terms of expenditure by the population. Participation in Leisure in the North East

6.7 CACI Participation Profile for Sport and Leisure 2010 provides data on participation levels in the North East in a wide range of leisure activities. The regional data is benchmarked against Great Britain data to identify whether participation levels are above or below average, thus providing an indication of demand / need. It is considered reasonable to make the link between levels of participation in, and the availability of facilities to support, any given sport or leisure activity: that is to say, below average participation in any given leisure activity could be attributed to an under provision of facilities to support the activity in any given location. Whilst broader behavioral / cultural factors may also impact on participation levels, the relationship between participation in and provision of is nonetheless a useful tool in planning for future leisure provision.

Individual Sports and Activities

6.8 Table 6.1 overleaf illustrates participation in a range of sports and activities for the North East region. The data demonstrates a large number of variations from national benchmarks in participation with athletics, bowls, boxing, fishing and show jumping among those activities where regional participation is substantially above the average level of participation for GB. With regard to team sports, only participation in football exceeds the national average with nearly all other sports (e.g. basketball, cricket, hockey) being substantially below national average.

Table 6.1 Individual Sports and Activities 2010

Data as %Data as % Profile for area for base Index 0 100 200

Athletics 53,417 2.5 1.4 180 Badminton 33,534 1.6 2.7 57 Bow ls 63,873 3.0 2.1 143 Boxing 36,406 1.7 1.0 176 Bird Watching 81,142 3.8 5.4 70 Cycling 244,227 11.3 10.5 108 Dance Classes 60,298 2.8 3.3 84 Fishing 94,340 4.4 3.4 127 Golf 110,596 5.1 5.3 96 Horse Riding 27,680 1.3 1.2 103 Ice Skating 12,869 0.6 0.8 74 Marathon Running 9,194 0.4 0.7 65 Running 86,266 4.0 6.0 67 Shooting 8,913 0.4 1.0 43 Show Jumping 10,531 0.5 0.3 190 Squash 10,179 0.5 1.1 41 Sw imming 251,316 11.6 11.9 97 Table Tennis 11,879 0.5 1.3 43 Tennis 26,296 1.2 2.6 47 Wrestling 1,558 0.1 0.2 45

Team Sports Data as %Data as % Profile for area for base Index 0 100 200

Basketball 2,192 0.1 1.0 10 Cricket 21,681 1.0 2.0 51 Football 177,499 8.2 6.0 136 Hockey 223 0.0 0.7 2 Ice Hockey 268 0.0 0.1 9 Rugby Union 13,944 0.6 0.9 74 Rugby League 130 0.0 0.4 1

Adventurous Sports

6.9 With regard to adventurous sports, the CACI profile again shows large variations from the national average for rates of participation. Participation in camping, mountain biking, climbing and extreme sports exceed the national average but in all other activities, participation was substantially below average.

Table 6.2: Adventurous Sports

Data as %Data as % Profile for area for base Index 0 100 200

Camping 137,448 6.4 4.2 153 Climbing / Mountaineering 53,966 2.5 1.5 170 Extreme Sports (e.g. BMX, Skateboarding) 27,094 1.3 0.8 155 Motor-cycle Racing 8,062 0.4 0.4 86 Motor Racing 5,959 0.3 0.3 85 Motor Rallying 1,586 0.1 0.2 35 Mountain Biking 51,136 2.4 1.7 138 Sailing / Motor Boating 4,734 0.2 1.1 21 Skiing 12,229 0.6 1.4 41 Snow boarding 2,171 0.1 0.5 18 Stock-car Racing 1,706 0.1 0.1 70 Surfing 3,592 0.2 0.4 37 Water Skiing 66 0.0 0.1 3 Windsurfing 86 0.0 0.2 2

Games and Gambling

6.10 All the activities listed within the Games and Gambling section of the CACI report that have relevance to spatial planning enjoyed relatively high rates of participation. Bingo, pub/club games (i.e. darts, snooker), ten pin bowling, greyhound racing and horse racing all have high rates of participation in the North East compared to the national average.

Table 6.3: Games and Gambling

Data as %Data as % Profile for area for base Index 0 100 200

Bingo 62,373 2.9 2.0 146 Bridge 5,965 0.3 0.7 38 Chess 12,553 0.6 1.1 54 Darts 74,498 3.4 2.6 135 Snooker 53,476 2.5 2.2 112 Ten Pin Bow ling 62,968 2.9 2.3 126 Football Pools 102,010 4.7 3.1 152 Game Machines 34,144 1.6 1.8 88 Greyhound Racing (Paid to w atch) 69,011 3.2 3.0 107 Horse Racing 132,612 6.1 4.3 142 National Lottery - Wed/Sat Draw (Plays every w eek) 966,610 44.7 39.7 112 National Lottery - Euro Millions (Plays every w eek) 537,344 24.8 15.2 164 National Lottery - Thunderball (Plays every w eek) 179,288 8.3 6.0 139 National Lottery Instants Scratch Cards 211,828 9.8 9.5 104 Other Scratch Cards 34,449 1.6 2.2 74

Health and Fitness

6.11 In respect of health and fitness, regional participation in health clubs, aerobics and rambling are at or around the national average. Only participation in Yoga is significantly below national average with jogging and weight training being less than national average by a smaller margin.

Table 6.4: Health and Fitness 2010

Data as %Data as % Profile for area for base Index 0 100 200

Yoga 39,312 1.8 3.6 51 Aerobics / Keep-Fit 241,917 11.2 10.9 103 Weight Training / Weight Machines 123,110 5.7 6.7 85 Jogging 127,657 5.9 7.8 76 Walking / Rambling 602,704 27.9 25.0 111 Health Club / Gym 996,125 46.0 44.7 103

Outings and Performances

6.12 Participation in days out tends to fall below national average in most activities including art galleries, nature reserves and zoos/safari parks (see Table 6.5). With regard to performances (See Table 6.6), participation was largely substantially below national averages with classical concerts, plays, opera, dance/ballet all having low rates of participation. Participation in cinemas was also below national average.

Table 6.5: Outings 2010

Data as %Data as % Profile for area for base Index 0 100 200

Art Galleries 378,949 17.5 24.0 73 Archæological Sites 262,476 12.1 11.9 102 Parks and Gardens 346,536 16.0 23.4 68 Museums 751,126 34.7 36.8 94 Nature Reserves 263,636 12.2 14.9 82 Theme Parks 592,848 27.4 29.2 94 Zoos / Safari Parks 309,481 14.3 22.2 64 Stately Homes and Castles 600,452 27.8 30.2 92

Table 6.6 Performances 2010

Data as %Data as % Profile for area for base Index 0 100 200

Ballet 1,131 0.1 0.1 52 Cinema 561,289 25.9 28.8 90 Contemporary Dance 1,006 0.0 0.1 49 Classical Music Concerts 6,860 0.3 0.8 38 Jazz Concerts 4,582 0.2 0.5 39 Opera 1,119 0.1 0.3 17 Plays 13,706 0.6 1.6 40 Gigs/Concerts 81,694 3.8 3.5 107 Theatre 36,344 1.7 2.4 70

6.13 In conclusion, CACI data for the North East in 2010 indicates a large degree of variation in levels of participation in sport and leisure activities in the North East compared to national average – in most cases, substantially lower participation rates than for Great Britain as a whole. We consider below the provision of leisure facilities across the region to inform our assessment of regional leisure provision. North East Leisure Provision

6.14 We have reviewed the provision of leisure facilities across the region based on the following key leisure categories:

 Hotels

 Cinemas

 Casinos

 Health and fitness

 Ten Pin Bowling

 Bingo

 Theatre

6.15 The analysis is intended to provide a comprehensive snap shot of the spatial distribution of leisure provision focusing on major operators. We acknowledge that there will be some smaller independent operators in each of these categories that we have not highlighted, but consider that focusing on the main operators provides an appropriate assessment for the purposes of this study – see Fig 6.1 overleaf.

Figure 6.1 Distribution of Leisure Provision within the North East

6.16 As can be seen in Figure 6.1, the majority of facilities are located in or close to the main centres within the region. This pattern differs slightly for hotel provision by the main operators, some of which locate out of centre on main motorway networks. There is a cluster of leisure provision within Newcastle in particular, with smaller clusters evident around Middlesbrough, Sunderland and Durham. Leisure provision is more limited further north in Northumberland.

6.17 Gyms/health clubs are relatively evenly and comprehensively distributed across the region both within and outside of main centres – a factor which can be linked to the strong level of participation in gym activity highlighted earlier in this chapter. Likewise, provision of hotels by main operators is also fairly evenly spread across the region. Provision of Casinos is limited, with Casinos located only within Newcastle, Sunderland, Durham and Stockton. Much of the large scale leisure provision such as bowling and Casinos is located within leisure parks in out of town centre locations.

6.18 Schemes in the pipeline include a potential snow dome development. Sunderland's Stadium Village, next to the Stadium of Light and the Sunderland Aquatic Centre has been identified as a potential location for such a facility which would house a real-snow ski slope, ice-rink, specialist sports shops, bars and restaurants. There are also aspirations for delivering a snow dome or ice arena in other parts of the region including at Gateshead‘s International Stadium Sports Village. This type of large scale leisure development is in tune with current markets trends, with larger scale leisure destinations, often in out of town locations proving popular with leisure operators, who struggle to find large enough sites in town centre locations on most occasions. Whilst there is no known requirement for such a facility at present it is inevitable that there will be interest from operators in providing such a regional attraction in the medium to longer term, which is currently lacking form the North East. Gap Analysis of Key Centres

6.19 Based on the spatial analysis of existing leisure provision, participation in leisure and our knowledge of the market, the following section provides analysis of leisure provision in the key centres.

6.20 For each of the centres analysed we have provided a summary table which provides an overview of the principle leisure provision within each centre based on the sub categories identified in para 6.1. Newcastle

6.21 The city does not have any clear deficiencies in terms of its commercial leisure provision, which is to be expected for a major city of Newcastle‘s standing. There are however some minor gaps in provision, and because of the scale of the market locally, we consider it likely that there will be significant additional leisure requirements and opportunities in the future that should be taken into consideration in strategic planning.

Cinema provision

6.22 Within the city centre there is a 12 screen Empire cinema within the Gate Leisure Complex, which also hosts a number of restaurants, bars, nightclubs and a casino. There is also an independent cinema, the Tyneside and other small scale independent cinemas at the periphery of the centre. We consider there to be a limited cinema offer for a City of this size, with Warner Brothers and The Odeon having vacated the City Centre. There is currently a known requirement for a Vue cinema within Newcastle City Centre.

Entertainment venues

6.23 There are a wide range of commercial entertainment venues including the Metro Radio Arena and numerous theatres. The Sage Gateshead, which is located on Gateshead quayside provides a music venue of national significance. The City lacks a large scale conference venue, although proposals for an International Conference and Exhibition Centre on Gateshead quays are likely to cater for this deficiency, if the proposals come to fruition.

Hotels

6.24 With regard to city centre hotels, there is considered to be an under provision of four star and boutique hotels as evidenced by the Newcastle Gateshead hotel facts sheets. The NewcastleGateshead centre hotel supply is a mix of 4 star, 3 star, budget and boutique hotels, together with one upper-tier budget hotel, one 2 star hotel and two serviced apartment complexes. In comparison with other UK cities of a similar size, Newcastle together with Gateshead has a relatively small stock of 4 star and boutique hotels.

6.25 City centre hotel supply has increased significantly since 2002 and is set to increase further with various schemes in the pipeline.

6.26 The delivery of schemes such as the new Conference and Exhibition Centre in Gateshead will undoubtedly provide a further requirement for additional hotels in the region.

6.27 We are aware of proposals by Sleeperz Hotels to set up budget hotels on land owned by Network Rail in a number of locations including Newcastle, and Sanguine Hospitality‘s plans to open a new £20m 148-bed four-star Indigo hotel on Fenkle Street in Newcastle in the second quarter of 2011.

Bars and Restaurants

6.28 The city centre is very well catered for in respect of bars and restaurants. The city itself is a destination for hen and stag parties and is very popular on most weekday evenings, given the high student population in the city. The focus of the evening economy has moved away from the Quayside and is now focused in the area around Bigg Market and The Gate leisure complex. The Quayside meanwhile has become an area with a concentration of restaurants and Haymarket, to Newgate Street and the Bigg Market are also popular destinations, as is the area around Central Station.

Table 6.7: Newcastle Leisure Facilities

In Town/Out Sector Operators Present? Quantity of Town Comments Hotels Premier Inn Including some in Gateshead and towards the Yes 10 3 In Town coast Travelodge Out of town nearby at MetroCentre, North Yes 7 2 In Town Tyneside and airport Holiday Inn Express Yes 3 1 In Town Ibis No 0 N/A

Other Newcastle also has many independent hotels and its hotel supply is bolstered by the supply of hotels in Gateshead. Hotels in Gateshead include the Hilton and Swallow Hotel. Mal Maison and the Copthorne are also prominant hotels on the Quayside. There is also a Marriott in Gosforth and two Best Western Hotels, a Thistle, a Jury's inn, indigo boutique hotel, Hotel du Vin Yes amongst others. Cinemas Odeon Yes 1 out of town Silverlink Empire Located in the Gate Complex on Newgate Yes 1 In Town Street UCI No Warner Village No Cineworld No Vue No Other Newcastle City Centre also has Tyneside Cinema which is independent along with the Side Cafe Cinema and Gallery and the Star and Shadow Cinema. Nearby cinemas include the Odeon at the Metro Centre and Cine world at Boldon Leisure Park and Customs House in south Yes shields. Casinos Aspers Yes 1 In Town Located at The Gate Grosvenor Yes 1 In Town Gala

Other Yes 1 In Town Circus Casino on Quayside Health Bannatynes Yes 1 In Town and David Lloyd Fitness Yes 1 Out of town South Gosforth Virgin Active No Other – e.g. Numerous independent municipal and several municipal leisure gyms out of town and in town (e.g. Bodyzone, Pine tree, Chase Fitness, Yes Both Scotswood Sports centre)

Bowling AMF Located in West End, now called First Bowl. AMF also Yes 1 Out of town located in Washington. Namco/XS Namco operate two centres at nearby MetroCentre and No North Tyneside Tenpin No out of town One in Sunderland Other No out of town Mega bowl, Starbowl Bingo Mecca Mecca Bingo located close to Quayside in Gateshead, Yes 2 plus Wallsend Gala Located in Byker. Also located at MetroCentre and Yes Out of town Wallsend. Other There are numerous bingo halls across Newcastle. Other bingo operators including Mayfair and Crown located out of town. Top Ten Bingo located in Gateshead. Riva Bingo and Ritz bingo both located out Yes Out of town of town. Theatre Several theatres including Theatre Royale, Journal Tyne Theatre, Newcastle Playhouse, Newcastle City Hall. Other performance venues located within Newcastle Gateshead include the Sage, The Metro arena and The Little Theatre Yes In Town Theatre, the Live Theatre.

6.29 Our analysis has suggested that the city does not perform as favourably in the casual dining/bars and restaurants market as might be expected. This sector of the leisure industry is proving popular in the current market and as such there may be scope for the expansion of this type of activity within the City.

6.30 We have accessed the Focus property database which includes details of retailer and operator requirement reports for the majority of towns and cities across the United Kingdom. In terms of pubs/bars and restaurants, Hooters and Marstons Plc have listed requirements in Newcastle, there are also a number of requirements within the larger centres from operators such as Frankie and Benny‘s, Chiquito‘s and Ego. There is also interest from coffee chains such as Starbucks and Costa Coffee.

Health and Fitness

6.31 With regard to health clubs, Virgin Active has a requirement for 45,000 sq ft unit in the city, but will also accept out of town sites, as long as the site has capacity for 300 parking spaces. Whilst not published, we expect that it is possible that there may be further requirements for space from budget gym operators such as PureGym, fitness4less and The Gym Group, all of whom are active within the health and fitness market and who do not currently occupy space within the City. Overall it can be seen that the major health operators are not present and Newcastle and the budget gym operators do not appear to have broken through. With the

working and student population of the city, this is perhaps surprising and may be down to the lack of suitable space. Appropriate sites would include those near office locations.

Bingo and Casinos

6.32 Aspers currently already have a casino in Newcastle and are looking to expand their provision locally. This may suggest scope for potential further provision within the city.

6.33 There are numerous Bingo Halls across the city and wider area. Metrocentre

6.34 The MetroCentre Qube is already well provided for in terms of big box leisure. The Yellow Quadrant, or Qube, which has recently been remodelled, replacing the former metroland is now anchored by a 12 screen Odeon Cinema with the first IMAX screen in the North East. The scheme also includes a Namco Funscape which comprises bowling, dodgems, a children‘s play area and arcade.

6.35 The Marriot, Travelodge, Premier Inn and Holiday Inn all operate hotels near the MetroCentre area and were found to achieve generally high occupancies in 2008. There are also further budget hotels in the vicinity. Its good access to Newcastle and Gateshead and its proximity to the A1 lends itself to further potential hotel use.

6.36 There has been a recent move by the centre management to include bars and restaurants into the centre to improve it as a leisure destination. They appear to be succeeding in this respect. A number of large chain restaurants are operating from the first floor of the new Yellow Mall including Pizza Express, Zizzi, Frankie and Benny‘s and Nando‘s.

6.37 The MetroCentre does not have its own health and fitness facility however there is provision with the nearby Marriot hotel.

Table 6.8: MetroCentre Leisure Facilities

In Town/Out Segments Operators Quantity of Town Comments Hotels Premier Inn Other Premier Inns located nearby 1 NA in both Gateshead and Newcastle Travelodge Holiday Inn Express 1 NA Ibis Other NA Other hotels include Marriott Cinemas Odeon 1 In town UCI Warner Village Cineworld Vue Other Other nearby cinemas in Newcastle and North Tyneside Casinos Aspers Grosvenor Gala Other Nearby casinos located in Newcastle

Health and Bannatyne‘s Fitness David Lloyd Virgin Active Other – e.g. municipal leisure 1 Small gym located in Marriott Hotel Bowling AMF Situated Westgate Road Newcastle Namco/XS 1 In town Tenpin Other 1 In town Megabowl situated in MetroCentre Bingo Mecca Gala 1 In town Other Other nearby Bingo Halls in Newcastle and Gateshead Theatre Theatre Theatre located in Newcastle Sunderland

6.38 The overall provision of leisure facilities within Sunderland centre is relatively poor for a centre of its size. Whilst current proposals to develop large scale leisure facilities within Sunderland have been directed towards the Sunniside development, in order to create a focussed and strong leisure destination, this is unlikely to be of sufficient scale to give Sunderland a competitive advantage over neighbouring cities and leisure parks.

Hotel provision

6.39 The main hotel operators are not currently well represented in Sunderland, with only 1 Premier Inn and 1 Travel Lodge present. Whilst pipeline developments at Stadium Village include plans for hotels this does not address the shortfall in the city centre. The loss of the 2018 World Cup is a significant factor as monies from this would have lead to further hotel development, nevertheless development may still be feasible.

Bars and Restaurants

6.40 Sunderland's night time economy has improved over the last 10 years, as the city has become popular with students. There are a number of bars in the city centre but a comparative lack of restaurant facilities, particularly and surprisingly in the casual dining sector.

6.41 In line with this shortfall, there are currently a number of published requirements from operators such as Frankie and Benny‘s, Chiquito‘s and Ego. Marstons PLC also have a published requirement for space within Sunderland.

Health and Fitness

6.42 Whilst there are a number of gyms present within the City private sector representation from main operators is relatively poor, which is surprising given the high student population. This may indicate a gap in the market for further development of such facilities.

Table 6.9: Sunderland Leisure Facilities

Segments Operators Quantity In Town/Out of Town Hotels Premier Inn Out of Town, including 1 at 3 Washington Travelodge 2 1 In Town and one at Washington Holiday Inn Express 1 out of town at Washington Marriott 1 Out of Town Best Western 1 Out of Town Other - Multiple Operators 0 Cinemas Odeon 0 Cineworld 0 Empire 1 In Town Vue 0 Other 0 Casinos Aspers 0 Grosvenor 0 Gala 1 in town Other 0 Health and Bannatyne‘s 0 Fitness David Lloyd 1 out of town Other - Multiple Operators 1 Out of Town Other - Independent 3 Other 1 in town / 4 out of town. Several 5 municipal leisure centres. Bowling AMF 1 Out of Town Namco/XS 1 Out of Town Tenpin 1 In Town Other 0 Bingo Mecca 1 In Town Top Ten Bingo 1 Out of Town Gala 1 Out of Town Other Theatre Theatre 3 1 in town / 2 out of town Durham

6.43 The City of Durham performs well in respect of leisure, in part because of its popularity with students and visitors. The City has a Casino, 2 bowling alleys, 4 bingo halls and 4 theatres. This level of provision is relatively good for a city of its size.

6.44 With regards to large scale leisure operations, the city is performing well and arguably caters particularly well for family orientated leisure. The Walkergate Complex which includes the Gala cinema and theatre, is located on the north east edge of the city centre is a popular venue amongst stage and comedy acts. The complex houses several national multiple restaurants and bars such as Slug and Lettuce, Fat Budda, Nando‘s, Chiquito, Ask and Lloyds Bar.

6.45 The city centre has a number of hotels including a Marriot, Premier Inn and Radisson. As can be seen from our gap analysis below, a number of main operators are represented within the City.

6.46 There is potentially scope to improve the night-time economy within the city, in order to claw

back some of the trade currently going to neighbouring Newcastle, which has proven popular with students. Mixed use developments with extra provision for bars and restaurants may be a suitable use for the area around Freeman's Quay and the former Ice Rink.

6.47 The City is well provided for in respect of health and fitness facilities, with 2 private gyms located within the City Centre, 18 independent Gyms and numerous municipal facilities.

Table 6.10: Durham Leisure Facilities

Segments Operators Quantity In Town/Out Town Hotels Premier Inn 4 1 in town / 3 out town Travelodge 2 1 in town / 1 out town Holiday Inn/Express 0 Marriott 1 In town Swallow Hotels 1 In town Best Western 1 In town Other - multiple Operators 3 2 in town/ 1 out town Cinemas Odeon 1 Out town Cineworld 0 Vue 0 Other 3 2 in town/ 1 out town Casinos Aspers 0 Grosvenor 0 Gala 0 Other 1 In town Health and Fitness Bannatyne‘s 2 1 in town / 1 out town David Lloyd 0 Other - Independent 18 Other – e.g. municipal leisure 13 2 in town / 11 out town Bowling AMF 0 Namco/XS 0 Tenpin 0 Other 2 Out town Bingo Mecca 0 Gala 0 Top Ten Bingo 2 1 in town / 1 out town Other 2 Out town Theatre Theatre 4 2 in town/ 2 out town Stockton

6.48 The big box retail offer is dominated by Teesside Shopping Park, the majority of which falls within Stockton's administrative boundary. The neighbouring Teesside Leisure Park falls within Middlesbrough‘s boundary. It has a number of large scale leisure attractions including a bowling alley, cinema and is home to many of the national multiple restaurants that you would

expect to find in such out of town developments. This out of town offer has impacted on the attraction and retention of traditional town centre retailers and leisure operators in Stockton.

6.49 There are no Bowling, Bingo or Casino operators located within Stockton, this sector of market demand being predominantly met by the units at Teesside Leisure Park.

6.50 The Tees Valley Hotel Futures report states that there is demand for a branded 3 / 4 star hotel and one budget hotel in the Stockton / Middlesbrough area by 2016. We believe the branded 3 / 4 star is more likely to be provided in Middlesbrough, although there is likely to be capacity for a new budget hotel in Stockton. A planning application is currently pending consideration for the development of a 50 bedroom, 5 star hotel with ancillary leisure facilities at Wellington Golf Club.

6.51 Stockton has a mainstream evening economy offer in the town centre, coupled with a few high quality restaurants.

6.52 The town centre is also well serviced by health club operators, with many of those serving the wider region located there. We are not aware of any current requirements from health club operators for the Stockton area.

6.53 Stockton Council has approved plans from Jomast for the multi-million pound redevelopment of the Globe Theatre into a leading performance venue. Stockton also benefits from an ARC arts and entertainments venue which hosts a number of performances. This suggests strong demand for this type of facility within the area.

Table 6.11: Stockton Leisure Facilities

Segments Operators Quantity In Town/Out of Town Hotels Premier Inn 1 In town Travelodge 1 In town Holiday Inn Express 0 Best Western 1 Out of town Other - multiple Operator 1 In town Cinemas Odeon 0 Cineworld 1 Out of town Vue 0 Other 0 Casinos Aspers 0 Grosvenor 0 Gala 0 Other 0 Health and Fitness Bannatyne‘s 1 Out of town David Lloyd 0 Other - independent 2 Other – e.g. municipal leisure 1 Out of town Bowling AMF 0 Namco/XS 0 Hollywood Bowl 0

Tenpin 0 Other 0 Bingo Mecca 0 Gala 0 Other 0 Theatre Theatre 2 1 in town/1 out of town Darlington

6.54 Darlington hosts a number of leisure attractions within the town centre including an Odeon cinema. The proposed Oval scheme is set to add additional leisure floorspace including new restaurants and bars.

6.55 The Tees Valley Hotel Futures report states that there is immediate potential for the Premier Inn to expand. In addition it identifies scope for a small boutique hotel in the town centre. The town is also home to two Best Western Hotels and a Bannatynes Hotel, showing good interest from main operators for a town of its size.

6.56 Darlington has a well developed evening economy with a good mainstream and high-end offer.

6.57 The Dolphin Centre leisure centre and sports facility, located within the town centre, was subject to a multi-million pound refurbishment throughout 2006, reopening to the public at the end of 2007. The town has representation from just one of the main health and fitness operators, perhaps suggesting that there is scope for further provision of this type of offer within the town. We are not, however, aware of any requirements from health centre proposals at present.

6.58 The town also has a bingo hall, a cinema and a theatre but is lacking a ten pin bowling alley.

Table 6.12: Darlington Leisure Facilities

Segments Operators Quantity In Town/Out of Town Hotels Premier Inn 1 In town Travelodge 0 Holiday Inn Express 0 Best Western 2 Out of town Bannatyne‘s 1 Other - Multiple Operators 0 Cinemas Odeon 1 In town Cineworld 0 Vue 0 Other 0 Casinos Aspers 0 Grosvenor 0 Gala 0 Other 0 Health and Fitness Bannatyne‘s 1 In town David Lloyd 0

Other independent Other – e.g. municipal leisure 2 1 in town / 1 out town Bowling AMF 0 Namco/XS 0 Tenpin 0 Other 0 Bingo Mecca Gala 1 In town Top Ten Bingo 1 In town Theatre Theatre 1 In town Middlesbrough

6.59 The leisure offer within the Middlesbrough area is reasonably good, although mostly this is located outside of the town centre boundaries onTeesside Leisure Park. The Park includes a Casino, Cinema and Bowling Alley.

6.60 Within Middlesbrough‘s town centre the flagship art gallery project, the Middlesbrough Institute of Modern Art (MIMA) opened its doors in January 2007 providing a significant regional scale attraction.

Hotel provision

6.61 Further to our comments made above regarding Stockton, we believe that a 3 star branded hotel could potentially be developed in Middlesbrough. This consideration is borne out by our gap analysis which shows only 3 main operators currently located within the town. Proposed development of Wellington Golf Club within Stockton is likely to cater for any demand for 5 star premises.

Bars and Restaurants

6.62 The evening economy and restaurant / cafe sector is somewhat underrepresented with no food courts or restaurants in the town centres shopping centres and a distinct lack of restaurants in the prime, pedestrianised retail sector in general.

6.63 In terms of pubs/bars and restaurants, there are a number of requirements within Middlesbrough from operators such as Frankie and Benny‘s, Chiquito‘s and Ego. Hooters also have a requirement published for space within Middlesbrough Town Centre. Our internal market activity database has identified other market activity which indicates interest from operators looking at the north east. During recent months Paddy O‘Sheas of Darlington has announced that it is planning to open a nationwide chain of pubs and clubs, and is currently considering properties in a number of locations including Teesside. Principle Leisure has also unveiled plans to open new coffee shops, bars and gastropubs in the North East. This may suggest possible scope for further provision of this type of facility within the town centre.

Health and Fitness

6.64 Teesside Leisure Park currently has the former health club unit vacant indicating possible over supply. There are limited private gyms within the town and we are not aware of any existing requirements, suggesting that there is no demand for further facilities at this time.

Table 6.13: Middlesbrough Leisure Facilities

Segments Operators Quantity In Town/Out of Town Hotels Premier Inn 1 In town Travelodge 1 In town Holiday Inn Express 0 Best Western 1 Out of town Other - multiple Operator 1 In town Cinemas Odeon 0 Show case Cinema 1 Teesside Leisure Park Vue 0 Other 0 Casinos Aspers 0 Grosvenor 0 Gala 1 Teesside Leisure Park Other 0 Health and Fitness Bannatyne‘s 1 Out of town David Lloyd 0 Other - independent DW Health and Fitness, Steel City. Otium Leisure located 2 within the Thistle hotel. Other Out of town, several municipal 1 facilities Bowling AMF 0 Namco/XS 0 Hollywood Bowl 1 Teesside Leisure Park Tenpin 0 Other 0 Bingo Mecca 0 Gala 0 Other 1 Majestic Bingo Theatre Theatre 2 1 in town/1 out of town Redcar

6.65 Redcar, as a seaside town, has a proportion of floorspace dedicated to tourist related leisure uses. Unfortunately, while a lot of effort has been expended maintaining Redcar's retail offer, the leisure offer aimed at tourists appears to be underperforming and is somewhat dated. Nevertheless, the Council has been proactive in seeking to improve and re-brand the town. Key proposals in respect of leisure and the visitor economy include the vertical pier development.

6.66 There were no growth projections run for Redcar within the Tees Valley Hotel Futures report, however, the report states that while there is potential for the development of a budget hotel in Redcar it is likely to be to the detriment of existing providers (B&Bs and guest houses). This analysis is borne out by our gap analysis (see below) which clearly illustrates that the main hotel operators are currently not represented in Redcar. The nearest main operator hotel is a Premier Inn located in nearby Guisbrough.

6.67 There are a number of pubs within the town and several hot food take away‘s and restaurants, however, overall provision across the licensed retail sector is poor, with limited choice and no interest from multiple restaurant operators.

6.68 Redcar‘s private sector health club offer is relatively undeveloped, with national operators located in nearby towns but not in Redcar itself. There are, however, several local and regional firms who are currently providing adequate facilities in the town. As such, the introduction of a larger national multiple could be to the detriment of existing businesses.

6.69 The town has a cinema, Bingo Hall, Bowling Alley and a theatre and as such is reasonably well provided for in terms of large scale leisure for a town of its size.

Table 6.14: Redcar Leisure Facilities

Segments Operators Quantity In Town/Out of Town Hotels Premier Inn 0 Travelodge 0 Holiday Inn Express 0 Other main operators 0 Cinemas Odeon 0 UCI 0 Warner Village 0 Cineworld 0 Vue 0 Other 1 in town Casinos Aspers 0 Grosvenor 0 Gala 0 Other 0 Health and Fitness Bannatyne‘s 0 David Lloyd 0 Other – e.g. municipal leisure 1 edge of town Bowling AMF 0 Namco/XS 0 Tenpin 0 Other 1 Out town Bingo Mecca Gala Crown Bingo 1 Out town Other Theatre Theatre 1 Out of town Hartlepool

6.70 Hartlepool has a limited leisure offer although we consider that it does cater appropriately for the number of residents in a town of its size.

Hotels

6.71 The Tees Valley Hotel Futures report states that, whilst there may be capacity for an additional budget hotel by 2016, there is a danger of oversupply in Hartlepool at present due to schemes already in the pipeline. The report identifies demand for 1 new site by 2016 plus

immediate potential for the expansion of the Premier Inn.

Bars and Restaurants

6.72 The town centre is well served by mid-market bars and restaurants along Church Street. We believe, however that Hartlepool has the potential to develop its restaurant offer further and there is very little by way of restaurants in the pedestrianised areas of the town centre.

Health and Fitness

6.73 There is only one private health club located within the town and we are not aware of any requirements from operators for this area. Hartlepool Borough Council is currently assessing options in relation to the redevelopment and modernisation of Mill House leisure centre.

Large Scale leisure

6.74 The town has a Cinema, Bingo Hall, Bowling Alley and a theatre and as such is reasonably well provided for in terms of large scale leisure for a town of its size. There is no casino.

Table 6.15: Hartlepool Leisure Facilities

Segments Operators Quantity In Town/Out of Town Hotels Premier Inn 1 Out of town Travelodge 0 Holiday Inn Express 0 Best Western 1 In town Other Cinemas Odeon 0 Cineworld 0 Vue 1 In town Other 0 Casinos Aspers 0 Grosvenor 0 Gala 0 Other 0 Health and Fitness Bannatyne‘s 0 David Lloyd 0 Springs Health Club 1 Out of town Other - Independent Other – e.g. municipal leisure 1 Out of town Bowling AMF 0 Namco/XS 0 Tenpin 0 UK Superbowl 1 Out of town Bingo Mecca 1 Out of town Gala 0 Other 0 Theatre Theatre 2 1 in town/ 1 out of town

Summary

6.75 We have talked earlier within this report about how the leisure market is evolving, with a move towards larger floor plate requirements together with the demands for co-location of facilities having necessitated larger sites. This has pushed leisure development into out of town locations, as can be seen in locations such as Middlesbrough and Stockton where the town centre leisure offer is very limited with big box leisure located in an out of town retail parks. These trends can also be seen within larger centres such as Newcastle, where more recent leisure development have been with shopping complexes such as The Gate or out of town retail parks such as the MetroCentre.

6.76 In terms of market trends, there is a noticeable growth in certain sectors of the leisure market, such as casual dining/cafes, which may produce opportunities for some locations within the North East, however it is expected that in the short term at least, current market conditions will dictate that there demand will be for sites and premises in the largest centres such as Newcastle.

6.77 Our analysis of participation levels in leisure activities has shown that there are certain areas where participation in the North East is below national averages. This suggests some gaps in provision, for example in facilities such as tennis clubs. It may also reflect the relatively lower spending power of individuals living within the North East to participate in sports which are often more costly to take part in. However, such facilities are often heavily state subsidised and therefore whether there will be requirements for such facilities in the future will depend on the appetite of local authorities and the availability of grant funding from Sport England and other bodies.

6.78 Our spatial analysis of leisure provision has demonstrated that there is a cluster of leisure provision within Newcastle in particular, with smaller clusters evident around Middlesbrough, Sunderland and Durham. Whilst provision of Gyms/health clubs and Hotels is relatively evenly and comprehensively distributed across the region, provision of Casinos is limited but growing and local authorities should consider planning for growth in this sector.

6.79 We have identified that there is currently no large scale leisure destination within the region, such as the Xscape development in Castleford. Whilst this type of large scale leisure development is in tune with current markets trends, a key consideration for local authorities across the North East is whether to attract such activities back to town centres through allocating and assembling suitable sites.

6.80 For all town centres across the region, we consider that local authorities should plan proactively for leisure uses to help underpin town centre sustainability and viability. This may involve allocating and even assembling sites for large scale commercial leisure operations, or zoning areas where leisure activities such as the evening economy can prosper. The evidence contained in this report provides some pointers, but further examination of requirements will be necessary at the local level to inform spatial planning.

7.0 Health Checks Introduction

7.1 To provide the basis for the qualitative analysis of town centre needs, we have carried out town centre health checks of each of the nine major centres (Newcastle, Middlesbrough, MetroCentre, Sunderland, Darlington, Hartlepool, Stockton on Tees, Redcar and Durham City). These were undertaken to assess each centre‘s vitality and viability in terms of its retail, leisure, commercial and civic offer and how it ―scores‖ in terms of indicators of vitality and viability including those recommended in Planning Policy Statement 4.

7.2 Whilst the MetroCentre is not a traditional town centre in that it has no administrative, community or civic function, its importance as a regional retail destination is such that it cannot be omitted from this assessment in order to provide a full picture of the retail offer of the North East. It is noted that most of the centres have recent Health Checks carried out by or on behalf of the Local Authority. Our work is not designed to replace those bespoke studies, but to facilitate comparison between each centre by assessing indicators on a consistent basis.

7.3 Appendix 4 provides a detailed health check report for each centre. The health checks consider the way in which each centre functions. This is not just dependent upon its retail offer, but on the town‘s ability to attract people to use its current services and to attract increasing investment over time, not merely to maintain services, but to improve its attraction, increasing the number of visitors in the longer term.

7.4 The table below sets out the earlier indicators recommended by PPS6 and compares them with those now recommended in its replacement PPS4.

Key Performance Indicator PPS6 PPS4

 Diversity of uses    Amount of retail, leisure and office floorspace in edge-of-   centre and out-of-centre locations  Potential capacity for growth or change of centres in the   network

 Retailer representation and demand    Rental levels  

 Proportion of vacant street level property and   the length of time properties have been vacant    Commercial yields  

 Land values and the length of time key sites have remained   undeveloped  Pedestrian flows  

 Accessibility    Customer and residents’ views and behaviour  

 Perception of safety and occurrence of crime    Environmental quality  

Diversity of Uses

7.5 PPS4 recommends that consideration of diversity of uses should be extended to examine the number, type and amount of floorspace of all main town centre uses, including offices, hotels and cultural and entertainment venues. In assessing diversity of uses we have undertaken a full inspection of each centre, noting all the retail occupiers and assessing the proportion of Comparison, Convenience, Service, Miscellaneous and Vacant premises. These are based on the Experian Goad definitions of each property sub-category. Each centre is then assessed on the basis of the diversity not only of the retail offer but also, as identified by PPS4, in terms of other town centre uses.

Amount of retail, leisure and office floorspace in edge-of-centre and out-of-centre locations

7.6 A new indicator introduced by PPS4 is the assessment of an area‘s edge and out of centre offer. This is undertaken to better understand the impact such developments can and do have on the vitality of a town centre when placed in direct competition (or indeed the positive impact when located carefully). When undertaking the health checks we also inspect and assess the performance of such development, noting overlap or direct conflict with the traditional centres.

Potential capacity for growth or change of centres in the network

7.7 A second indicator introduced by PPS4 is the assessment of an area‘s potential for growth or substantial change in the future. The likely growth or change is affected by predicted population changes, physical capability, planned investment and current expenditure patterns.

Retailer representation and intentions to change representation

7.8 The number and quality of outstanding retail requirements for a town is an indicator of both the demand for space and of retailers‘ perceptions of the centre. A large number of requirements may suggest a lack of available space or appropriately sized units in a town or city centre, and / or improvement in desirability brought about by changes in circumstances. This should be treated with caution, however, as not all of these requirements are necessarily for the town centre. Some operators for instance may register requirements for a particular town although these are often for units of a size synonymous with out-of-town or retail park locations. Furthermore, operators may circulate requirements for every town where they are not represented, without having necessarily a genuine intention to locate there. Nevertheless, the requirements databases provide an indication of potential demand from retail occupiers not currently represented in the town or from those with compromised space seeking to relocate into alternative premises.

7.9 In addition to these published requirements, it is important to note that there are many retailers who do not actually publish their requirements, but who may be attracted to a town which matches their operating profile. Furthermore there may be requirements from independent retailers at certain locations, although these are harder to establish as they are rarely advertised.

Retail Rankings

7.10 In order to assess each centre‘s positioning within the retail hierarchy we have reviewed the industry standard retail ranking list, Venuescore, which is explained in more detail below.

7.11 Experian also produces a yearly retail centre rankings report which, up until 2002, covered the top 300 retail centres, but from 2003 onwards, only covers the top 50 retail locations nationwide and then looks at the top 10 centres in each region. For the purposes of reviewing the subject centres therefore, this ranking system has been excluded from our analysis.

7.12 Javelin Group‘s Venuescore ranks the UK‘s top 2,000 + retail venues – including town centres, standalone malls, retail warehouse parks and factory outlet centres. The retail offer of each venue is assessed using a scoring system which takes account of multiple retailers, each of which is weighted to reflect its overall impact on shopping patterns. For example, anchor stores such as John Lewis, Marks & Spencer and Debenhams receive a higher score than other unit shops. The aggregate score is called a location‘s ‗Venuescore‘. In addition to its Venuescore, the top 350 centres are also assessed in terms of:-

 Market positioning (i.e. is the offer aspirational or down-market?)

 Age focus (is the offer targeting younger or older customers?)

 Fashionability (is the offer traditional or progressive?)

7.13 One limitation of Venuescore is that it excludes consideration of the centre‘s independent offer, thus not recognising the contribution to the economy and to local distinctiveness made by this sector, which is in some centres highly significant. Where we consider that a centre has been undervalued by Venuescore, we have commented accordingly within our health checks.

Shopping Rents

7.14 We have assessed the retail rents prevalent in the primary shopping areas of the town centres. This is based on comparable information collected and analysed to provide the rental value ―in terms of Zone A‖ (ITZA). Zoning is the method of measurement of a shop which attributes greater value to the first 6 metres of sales space from the shop front and proportionately smaller values to progressive 6 metre strips of sales space towards the rear of the premises (with lower values being attributed to ancillary space, upper floors and basements) and is an industry standard valuation technique. Measurement by this method is a useful benchmark as it allows comparison of rents across different locations in a town and is the normal basis on which retailers consider the rental cost of traditional town centre shops.

Proportion of vacant street level property

7.15 Clearly, the vacancy rate of retail premises in any town can be a reflection of retailer demand although this has to be analysed with some caution as the vacancies may not be necessarily located in the ‗prime‘ retail areas or may be difficult to let because of size or shape. It is important therefore to take into consideration the location and type of any vacant premises within the town centre.

Length of time properties have been vacant

7.16 As well as the proportion of vacant properties, PPS4 has introduced the requirement to mark how long street level units have been unoccupied. This is clearly important as it helps to differentiate between areas of long term inactivity where intervention may be beneficial and short term vacancies at the time of inspection.

Commercial yields on non-domestic properties

7.17 The commercial yield on non-domestic property is a value-based property market indicator of

viability. The yield on a property investment is a measure of the return, by way of rent, on the capital invested in purchasing that investment. The greater the prospect of rental growth, or the more secure the income, the lower the initial yield that the investor will accept. Conversely, where a town centre is perceived by investors as having poor economic prospects, or where the rental covenant is poor, a relatively higher initial yield is required to compensate for lack of rental growth to offset the greater risk. More and more, the investment market has become a national one when dealing with very strong High Street retail and leisure covenants and yields of investments occupied by such tenants are extremely low, almost irrespective of the location.

Pedestrian Flows

7.18 The measure of pedestrian activity in a town centre is clearly a measure of its success – the town is attracting visitors which should help to encourage expenditure. For the purpose of this report we have not commissioned a pedestrian footfall survey (primarily because of the number of centres in question and the likely costs involved). However, we have undertaken an observational review of each centre on the date of our inspection from which to draw conclusions. Clearly this is not an accurate measure of pedestrian footfall as it is a judgement based on a one-off, single day of the week and therefore cannot be representative of the town centre. We have supplemented our inspections by the use of any available research carried out within the centres and, given the constraints of the study, it is considered that this will be more than adequate for our purposes.

Accessibility

7.19 This section provides an analysis of how easily accessible each centre is by a variety of public and private transport methods. It also identifies how the centre functions in terms of criteria such as distances and routes to the town centre from bus or railway stations or assessing the number of car parking spaces available and their location. In addition, we have undertaken an assessment of each centre in terms of its pedestrian accessibility – i.e. its penetrability and the ease of movement around the town.

Perceptions of safety and the occurrence of crime

7.20 Crime Statistics are available on the Home Office website (www.crimestatistics.org.uk) and are listed by Local Authority. The statistics are broken down into 9 categories of offence and recorded between the period April 2005 to March 2006. These categories are as follows:

 Burglary,

 Criminal Damage,

 Drug Offences,

 Fraud & Forgery,

 Robbery,

 Sexual Offences,

 Vehicle Theft,

 Violence against the Person; and

 Other Offences

7.21 The statistics are recorded as a total number of offences and offences per 1,000 of the population and then compared against the England and Wales average. It must be noted that in some instances, recorded statistics cover areas considerably wider than the town centre in isolation.

Town Centre Environmental Quality

7.22 This indicator provides an assessment of some of the visual and physical attributes of the town/city centre including landscaping, pedestrianised areas, street furniture, general standards of repair, standard of shop fronts, pedestrian links and vehicular gateways. Results

7.23 As indicated above, we have prepared detailed health check reports for each of the main nine city/town centres. In this section, we provide a summary of the results, utilising a simple traffic light coded table to provide an indication of each centre‘s performance on the health check indicators listed above. The table, presented overleaf, defines the requirements for achieving a green/amber/red rating for each indicator, together with the results. We then provide a short summary of each of the health check reports followed by a brief analysis of the smaller centres.

Health Check Indicator Analysis

Indicator Award Criteria Darlington Durham Hartlepool Middlesbrough MetroCentre Newcastle Redcar Stockton Sunderland

A1 Diversity of main town centre uses (by number,type and Green Equivalent or greater than Uk amount of floorspace):the amount of space in use for average percentage of different functions – such as comparison goods offices;shopping;leisure,cultural and entertainment activities;pubs,cafes and restaurants;and,hotels. Amber Within 5% points off UK average of comparison goods

Red More than 5% points off the UK average of comparison goods

A2 The amount of retail,leisure and office floorspace in edge- Green Limited presence of out or of-centre and out-of-centre locations. edge of town parks with open A1 consent

Amber Significant presence of out or edge of town parks with open A1 consent

Red Numerous and substantial presence of out or edge of town parks with open A1 consent A3 The potential capacity for growth or change of centres in Green Land exceeding 5ha within or the network:opportunities for centres to expand or on the edge of centres that is consolidate,typically measured in the amount of land consented or committed for available for new or more intensive forms of town centre retail or leisure use development. Amber Land between 1-5ha within or on the edge of centres that is consented or committed for retail or leisure use Red Land less than 1ha within or on the edge of centres that is consented or committed for retail or leisure use A4 Retailer representation and intentions to change Green Equivalent or greater than Uk representation:existence and changes in representation average of multiple operators of types of retailer,including street markets,and the demand of retailers wanting to come into the centre,or to change their representation in the centre,or to reduce or Amber Within 5% points of UK close their representation. average of multiple operators

Red Greater than 5% points of UK average of multiple operators

A5 Shopping rents:pattern of movement in Zone A rents Green Upwards within primary shopping areas (ie.the rental value for the first 6 metres depth of floorspace in retail units from the shop window). Amber Stable or slight fall

Red Substantial fall

A6 Proportion of vacant street level property and the length of Green Vacancies more than 3% time properties have been vacant:vacancies can arise below UK average even in the strongest town centres,and this indicator must be used with care.Vacancies in secondary frontages and changes to other uses will also be useful Amber Vacancy +/- 3% of UK indicators. average

Red Vacancy rate more than 3% above UK average

A7 Commercial yields on non-domestic property (i.e.the Green Strong prime retail yield and capital value in relation to the expected market investor appetite rental):demonstrates the confidence ofinvestors in the long-term profitability of the centre for retail,office and other commercial developments.This indicator should be Amber Average prime retail yield and used with care. investor appetite

Red Weak prime retail yield and investor appetite

A8 Pedestrian flows (footfall):a key indicator ofthe vitality of Green Clearly defined pedestrian shopping streets,measured by the numbers and flows throughout centre movement of people on the streets,in different parts of the centre at different times ofthe day and evening,who are available for businesses to attract into shops,restaurants Amber Defined pedestrian flows in or other facilities. prime pitch

Red Weak or ill-defined pedestrian flow

A9 Accessibility:ease and convenience of access by a Green Accessible by public transprot choice of means of travel,including – the quality,quantity throughout catchment and type of car parking;the frequency and quality of public including the provision of clear transport services and the range of customer origins signage and safe crossings served;and,the quality of provision for pedestrians,cyclists Amber Accessible by public transport and disabled people and the ease of access from main from major residential areas arrival points to the main attractions.

Red Poor accessibility to centre from most areas

Darlington

7.24 Darlington is a strong centre, showing signs of resilience in a tough economic climate. The Pedestrian Heart works have opened up the prime retail pitch to shoppers and created a clean, modern and pleasant environment which encourages movement to the markets and beyond. The independent operators within the town‘s Yards and Wynds, located between the two north-south retail pitches, connect seamlessly with the national multiples on the high street. The Cornmill Shopping Centre and the high street are performing well, both having reduced their vacancy rate between the Experian GOAD inspection and our own.

7.25 Nevertheless the results of the Household Survey carried out for the purposes of this study suggest that Darlington is not trading as well as it might.

7.26 Darlington currently suffers from a lack of large format retail units within the town centre. This has led to Wilkinsons, TK Maxx and JJB Sports being located on the edge of centre, and an abscence of traditional large-format retailers which could be expected in a town with Darlington's retail strength. The speed at which Next entered negotiations to occupy the former Woolworth‘s units, the absence of large format retailers such as Gap or H&M, and the location of Wilkinsons, TK Maxx and JJB Sports on the periphery of town centre all point towards latent demand for such accommodation.

7.27 The retail-led scheme on Commercial Street is a key opportunity to increase the town‘s retail offer and, specifically, address the current lack of supply in a flexible format capable of meeting the needs of a variety of requirements, specifically those with a large format which are currently not supported by existing supply. Particular attention should be paid to the two Next units being left vacant by their imminent relocation as a means of judging retailer appetite for prime space.

7.28 There is a good supply of convenience floorspace within the centre, including Marks and Spencer. There is a good selection of smaller format retailers in and around the town, including specialist and independent retailers within the covered market.

7.29 Overall Darlington centre appeared vibrant during the day when surveyed. There are advanced plans to house future retail development in the Commercial Street area which offer an exciting opportunity to enhance the existing offer and extend the town centre.

Darlington SWOC Analysis

Strengths Weaknesses

 Areas of high quality public realm and  Lack of large format retail units shopping environment  Lack of a high value fashion offer  Compact and legible town centre retail  Queen Street is a dated shopping centre offer a high vacancy rate  Strong independent offer  Declining market share for comparison  Distinct retail environment within yards, goods retailing alleys and wynds

Opportunities Constraints

 Commercial Street area offers an  Market conditions and developer excellent, high profile, development confidence opportunity  Impact of competition for comparison  Large format retail development within goods from out of centre developments the core would help attract high profile  Consolidation of Next in the Cornmill retailers Centre leaves two high profile vacancies  Future retail administrations  Impact of public sector spending cuts and austerity measures on development and town centre services.

Hartlepool

7.30 Hartlepool is a relatively strong and vibrant centre with certain areas of very attractive shopping environment. It is represented by a variety of retailers ranging from national, multiple retailers to small start up and independent businesses. Most of the national comparison retailers are located within Middleton Grange Shopping Centre.

7.31 High end fashion retailers and boutique stores are somewhat underrepresented in Hartlepool town centre although there are a large number of independent retailers located in strong positions on the secondary retail streets.

7.32 The evening economy and restaurant / cafe sector is somewhat underrepresented with a distinct lack of restaurants in the town centre. There is also a shortage of mainstream leisure facilities although it is understood that Hartlepool Borough Council is reviewing options for its Mill House Leisure Centre and we consider that there is an opportunity for the creation of a sports village concept through developing linkages with the adjoining Hartlepool United Football Club.

7.33 While Middleton Grange is clearly an asset to the town and represents the prime retail pitch, it is also a barrier to pedestrian connectivity when closed to shoppers. The dominance of the shopping centre is both a strength and a constraint to the town centre. That said, the town centre has shown some signs of improvement in the last 12 months having risen 21 places from the 2009 Venuescore rank of 248th to 227th. This is an exact reversal of the fall between 2008 and 2009.

Hartlepool SWOC Analysis

Strengths Weaknesses

 Areas of high quality public realm and  The performance of the centre is tied to shopping environment the success of its only shopping centre  Compact and legible town centre retail  Lack of a high value fashion offer offer  Lack of a strong evening economy and restaurants  Dated shopping centre with prominent, long-term vacancies Opportunities Constraints

 Development of the new Hartlepool  Market conditions and developer College campus and the bus station will confidence revitalise the Church Street area.  Future retail administrations  Potential for sports village type  Lease events and portfolio consolidation redevelopment of Mill House Leisure exercises increasing the vacancy rate Centre exploiting links with Hartlepool  Impact of public sector spending cuts United FC and austerity measures on development  Develop the restaurant market and town centre facilities  Medium-term improvement of Middlesbrough‘s retail offer.

Middlesbrough

7.34 Middlesbrough has traditionally been the main sub regional town centre for the Tees Valley area and although it has managed to hold its own in recent years it has suffered from growth in out of town retailing with Teesside Retail Park among others leading to high levels of leakage of spend.

7.35 It is a vibrant centre with an attractive shopping environment which shows little evidence of vandalism or littering. A wide spectrum of retailers are represented in the town centre ranging from national, multiple retailers to small start up and independent businesses. It is particularly well represented by multiples with only John Lewis and Waitrose not represented from the Goad Experian defined list of 31 major retailers.

7.36 High end fashion retailers and boutique stores are somewhat underrepresented in Middlesbrough town centre although a small number of good, independent fashion retailers have begun to cluster on the non pedestrianised section of Linthorpe Road.

7.37 The evening economy and restaurant / cafe sector is also somewhat underrepresented with no food courts or restaurants in the town centre shopping centres and a distinct lack of restaurants in the prime area. The leisure offer of Middlesbrough town centre is generally an area of weakness.

7.38 In response to the constraints on development land in the town centre, the Middlesbrough LDF has extended the town centre boundary to the west and allocated a large development site that has the potential to accommodate a wide range of retail and leisure uses, thus giving the town centre capacity for considerable growth in the future.

7.39 The town centre will continue to be affected by the proximity of Teesside Retail Park. The strength of the retail offer at Teeside Retail Park coupled with the availability of large, well configured floorplates is likely to have an increasing impact on the town centre over the coming years as lease events force retailers to make straegic decisions. It was apparent upon our inspection that Currys is to relocate to Teesside Retail Park and Arcadia has already closed its Dorothy Perkins and Wallis fascias on Linthorpe Road. The extension of the town centre boundary and proposed development of Cannon Park could alleviate, if not eradicate these concerns over the medium to long term.

7.40 Middlesbrough has fallen 7 places from the 2009 Venuescore rank of 40, which had previously fallen 7 places from 2008 levels. It is therefore clear that the centre cannot afford to remain static if it is to retain its existing role as a Major Regional Centre.

Middlesbrough SWOC Analysis

Strengths Weaknesses

 High quality public realm and shopping  Railway station isolated from the retail environment core  Good quality managed retail  Lack of a high value fashion offer accommodation in 4 shopping centres  Lack of a strong evening economy and  Strong retailer representation restaurants  Well integrated bus station  Compact and legible Town Centre retail offer

Opportunities Constraints

 Develop Cannon Park to extend the  Difficult ownership constraints on Town Centre retail offer, increase retail development sites restricting their capacity, attract new investment and readiness for development clawback leakage of consumer spending  Market conditions and developer to competing centres confidence  Consolidate and develop the cluster of  Future retail administrations high end, independent fashion retailers  Lease events and portfolio consolidation on Linthorpe Road exercises increasing the vacancy rate  Develop the restaurant market  Increasing influence of Teesside Retail  Improvements to Albert Road to better Park integrate the railway station with the  Impact of public sector spending cuts Town Centre and austerity measures on development and town centre services.

Redcar

7.41 For a town of its size, Redcar is performing relatively well. Between the date of the Experian GOAD survey and the DTZ survey there was an apparent reduction in vacancy rates and the centre appeared to have a vibrancy absent from many other within the region. This may be, in part due to Redcar‘s relative isolation from the regional threat of Tees Valley Retail Park, with the Middlesbrough conurbation acting as a natural buffer to leakage to this destination.

7.42 The appearance of decline that vacant units give a centre, which has become more apparent during the last few years with difficult economic conditions, has been reduced by active Town Centre management. The shop front initiative that has been rolled out throughout the centre has enjoyed some success in creating an altogether more pleasing retail environment.

7.43 Regents Walk and the High Street link together well, providing complementary but separate identities. They also fulfil different roles within the centre, with the High Street still home to many strong independents alongside national multiples.

7.44 Whilst overall the main shopping parade is performing well, the amusements and nightclubs along the coast are beginning to look a bit dated. It is expected that the successful delivery of the HUB and vertical pier will add to the daytime vibrancy of this area of town, although should it be delayed this situation could deteriorate further.

Redcar SWOC Analysis

Strengths Weaknesses

 Areas of high quality public realm and  Lack of a high value fashion offer shopping environment  Dated leisure offer aimed at tourists  Middlesbrough acts as a buffer to Tees appears to be underperforming in Valley Retail Park leakage relation to the retail offer  Compact and legible town centre retail offer  Strong and proactive town centre management

Opportunities Constraints

 The HUB development will add vibrancy  Market conditions and developer to the coastal area during the day confidence  Future retail administrations  Lease events and portfolio consolidation exercises increasing the vacancy rate  Impact of public sector spending cuts on town centre services.  Medium-term improvement of Middlesbrough‘s retail offer

Stockton

7.45 Stockton was once the principal shopping centre in Teesside up until the economic downturn and decline of the areas‘ main sources of employment in the 1970s and 1980s which coincided with the decline of the town centre.

7.46 Stockton has the potential to be a strong town centre. It suffers from well known and well identified threats in the form of Tees Valley Retail Park and Portrack Lane out of town offer which house many of the national multiples which are missing from the centre. It is also very close to Middlesbrough which provides a much greater range of retail attractions. As such, there are currently too many units within Stockton for the number of national multiple occupiers interested in the centre, especially in such challenging economic times.

7.47 There are, however, some high quality retail environments within the town centre. The Cultural Quarter, located in and around Silver Street and incorporating Green Dragons Yard, is evidence of the potential impact of public sector intervention. The recently improved streetscape has created a continental feel to this side of town, maximising the riverfront views and nearby office occupiers. The High Street itself also provides an attractive retail environment, again making the most of one of Stockton‘s natural assets. The width of the High Street, largely pedestrianised towards Wellington Square, makes it perfect for events, cafes and of course the market, all of which encourage an increase in dwell time. Focusing on distinctiveness, rather than emulating the competition is more likely to bring success.

7.48 The amount of well sized and located vacant units implies that from a purely qualitative angle there appears to be little demand for new comparison development. It is likely that for development of the town centre to occur it will have to be food-store led, as was originally planned for the Southern Gateway scheme, and similar to what is currently being delivered in Gateshead.

7.49 When visiting Stockton, it is hard for the initial impression not to be one of a centre in decline due to the quantity of high profile vacancies. Initiatives in other centres, such as Redcar, have seen artificial shop fronts placed within the shop windows of high profile vacancies. While this is not a long term solution to Stockton town centre‘s problems, it is a low cost way to negate the most visible of them.

7.50 The 2009 Town Centre Study concludes: ―the fundamental problems facing the town can only be addressed by prioritising efforts to introduce new anchor retailers, improve connectivity, revitalise the public realm and rejuvenate the mix of uses on the High Street.‖

Stockton SWOC Analysis

Strengths Weaknesses

 Areas of high quality public realm and  Proximity to Tees Valley Retail Park shopping environment  High level of vacancies throughout the  Pro-active Local Authority with a track town centre including many long term record in delivering quality town centre vacancies in high quality units improvements  Two quality, but underperforming  Identified and accepted problems at a centres high level

Opportunities Constraints

 Develop the restaurant market and  Market conditions and developer continue to maximise the potential of the confidence riverside and width of the High Street  Future retail administrations  Seek funding for shop-front  Lease events and portfolio consolidation improvements and, in particular, those exercises increasing the vacancy rate akin to the art-based shop window  Impact of public sector spending cuts on improvements currently in place at the existing active town centre Redcar management.  Medium term improvement of Middlesbrough‘s retail offer

Durham

7.51 Durham is a historic centre with a diverse, if geographically concentrated, retail, leisure and cultural offering. There are national and regional multiple retailers present in the centre and also several high quality independent retailers. The City lacks a traditional higher order department store and a range of designer fashion, but given its proximity to Newcastle and the MetroCentre and its physical size, this is not surprising. The projects contained in the Masterplan, if able to be delivered, will go some way towards addressing this deficiency, although desired retailers would need to be persuaded that Durham can be sufficiently profitable to justify their investment.

7.52 The City‘s restaurant and cafe provision has improved as a result of the Walkergate scheme although there appears to be a dearth of the night time economy uses normally found in a city that is well populated by students.

7.53 Durham does suffer from a lack of potential development sites within the city centre, and most proposed projects focus around redeveloping existing stock. The recession, current lack of activity in the market and uncertainty over future funding put at risk the delivery of the Masterplan.

7.54 Durham cannot compete with the size and ―pulling power‖ of Newcastle city centre or the MetroCentre in terms of its multiple retail provision. To encourage retention of expenditure within the City, it is important that improvement projects are kept alive and the existing centre, particularly around North Road, is regenerated sympathetically.

Durham SWOC Analysis

Strengths Weaknesses

 High quality public realm and shopping  Lack of available larger retail units environment  Railway and Bus station isolated from  Sub regional town serving wider county the retail core  Strong retailer representation  Lack of a high value fashion offer  Strength of Tourism due to attractive  Lack of space and challenging historic centre and World Heritage Site topography status  Poor west end of city around North Road  Large student population and The Gates  Out of town competition  Leakage of expenditure to Newcastle, Metro Centre and elsewhere Opportunities Constraints

 Develop the west end of the city and  The Town Centre boundary is improve the comparison offering around constrained topographically North Road  Market conditions and developer  Delivery of other Masterplan priority confidence projects  Future retail failures  Improve high value fashion offer  Lease events and portfolio consolidation exercises increasing the vacancy rate  Impact of public sector spending cuts

and austerity measures on development and city centre services.

MetroCentre

7.55 The MetroCentre is a successful and well managed regional shopping facility with an excellent retail offering. Of all the comparison key attractors (as identified by Goad) only John Lewis and Wilkinsons have no representation. Like all retail centres it has suffered as a result of the downturn in the economy and lettings have become more difficult and tenant friendly, but vacancy levels have not become excessive.

7.56 The Centre‘s Red Mall expansion together with remodelling of the Yellow and Blue quadrants and a new transport interchange have refreshed the centres offer and introduced new operators and attractions.

MetroCentreSWOC Analysis

Strengths Weaknesses

 High quality public realm and shopping  Relative lack of a up market fashion offer environment  Evening economy provision still currently  Pro-actively managed and updated lacking a critical mass  Strong retailer representation  Good public transport linking to other towns and city centres  ‗Largest shopping centre in the UK and EU‘  Excellent public safety

Opportunities Constraints

 Further development of night time  Increasing policy resistance to further economy in yellow mall out of town development and associated  Improve up market fashion offer (but prioritisation on town centre schemes such improvement would be to the targeting ―clawback‖ of spend detriment of Newcastle City Centre)  Market conditions and retailer confidence  Future retail administrations  Lease events and portfolio consolidation exercises increasing the vacancy rate  Impact of public sector spending cuts and austerity measures on the local area  Traffic congestion on Western Bypass an unlikelihood of upgrade in near future

Newcastle

7.57 Newcastle upon Tyne is a successful, strong, cultural and vibrant city with an impressive retail offering. The City accommodates many national and multiple retailers and the new Eldon Square extension has harnessed the ability to attract some new occupiers to the city such as Hollister (part of Abercrombie and Fitch) and Apple Stores. These retailers operate in very few locations around the UK and their presence highlights the regard in which retailers hold Newcastle. Of the 31 major retailers identified by Experian Goad as key attractors only House of Fraser is not represented in the City Centre.

7.58 Newcastle, like everywhere else, has suffered during the economic downturn and retail rents have fallen, but it is difficult to analyse just how much the City has been affected based on rents alone as the new Eldon Square extension has clouded exactly where prime pitch is at the moment. It is also difficult to analyse the City‘s performance based on vacancy rates as there are many empty properties in areas that are awaiting redevelopment, for example East Pilgrim Street.

7.59 As highlighted in previous studies, Newcastle does not have an abundance of high end fashion retailers. There are some good quality fashion retailers present in solus units and others represented in department stores, but it is in this area particularly that Newcastle does not compete with its northern city competitors of Manchester and Leeds. It is clear there have been strides made to increase the convenience offer with the introduction of two Tesco Extras and 1 Sainsbury Local, which are a requirement of modern cities.

7.60 Newcastle has many development opportunities, with East Pilgrim Street site representing the best and most significant retail opportunity within a site boundary of 17 hectares. The Venuescore ranking for Newcastle in 2010 is 11, down from 10 in 2009 (thanks to Cardiff) but up from 15 in 2008. Newcastle has made progress to become one of the top retail destinations in the country and continued investment and development of key opportunities will cement its place as one of the UK‘s top city centres.

Newcastle SWOC Analysis

Strengths Weaknesses

 High quality public realm and shopping  National railway station isolated from the environment retail core  Good quality managed retail  Insufficient up-market fashion offer accommodation in 2 shopping centres  Competitiveness with other major  Strong retailer representation northern cities is limited by relative  Well integrated transport affluence of the region.  Compact and legible Town Centre retail offer  Development sites available to deliver further opportunity  Excellent leisure and cultural offer

Opportunities Constraints

 Development of East Pilgrim Street to  Market conditions and developer extend the City Centre retail offer and confidence increase retail capacity  Future retail failures

 Continuation of mixed use development  Lease events and portfolio consolidation elsewhere in the city to develop exercises increasing the vacancy rate convenience retail and leisure offer  Influence of MetroCentre  Impact of public sector spending cuts and austerity measures on development and City Centre services.

Sunderland

7.61 Sunderland‘s prime retail pitch is concentrated almost exclusively on the Bridges Shopping Centre with most other parts of the centre having a secondary feel. There are a number of national and multiple retailers present in the city centre with a strong element of independents located on edge of city sites. Of the 31 major retailers identified by Goad Experian only four are not present from the city centre; these are Sainsbury‘s, House of Fraser, John Lewis and Waitrose.

7.62 Sunderland does not have high end boutique retailers and its restaurant and cafe facilities are more geared towards the student end of the market. It is perhaps unrealistic for the city centre to attempt to compete with both Metro Centre and Newcastle city centre for higher order special shopping, but efforts should be made to attract a range of provision that encourages retention of expenditure generated within the catchment area.

7.63 Unlike some of its North Eastern neighbours, Sunderland does not suffer from a lack of potential development sites surrounding the city. Clearly the development of the Vaux and Farringdon Row sites is a key priority but also the Holmeside site in time should offer a new opportunity to enhance the offer of the city centre.

7.64 The recession and corresponding lack of activity in the market means that aspirations for growth are unlikely to be realised in the short term, with most projects requiring a degree of public sector involvement. The Holmeside Triangle project is a stalled retail scheme and we understand that its delivery is in doubt due to changing market conditions and competing site opportunities elsewhere in the city centre.

7.65 The Venuescore ranking for Sunderland in 2009 is 111, down from 97 in 2008 of a list of UK centres. This is a worrying trend and only highlights the importance of future investment in the city to prevent further decline in comparison with competing centres.

Sunderland SWOC Analysis Strengths Weaknesses

 Potential development sites available for  Lack of a high value fashion offer expansion  Lack of a strong evening economy and  Good quality retail core that is well restaurants managed  Strong retailer representation  Well integrated bus and rail services  Compact and legible town centre retail offer 

Opportunities Constraints

 Delivery of Economic Masterplan and  Strong competition from Newcastle city key development sites including Vaux centre and MetroCentre Brewery, Holmeside Triangle.  Market conditions and developer  Further Development of Sunniside to confidence increase the restaurant and night time  Future retail administrations economy market.  Lease events and portfolio consolidation exercises increasing the vacancy rate  Impact of public sector spending cuts and austerity measures on development and city centre services.

Smaller Centres

7.66 We have undertaken desktop analysis of the 6 identified smaller centres: South Shields, Washington, Bishop Auckland, Peterlee, Ashington and Berwick upon Tweed. In the case of South Shields, Washington and Bishop Auckland we have been able to base the assessments on Venuescore information, alongside that produced by the relevant authorities. No Venuescore data was available for Peterlee, Ashington and Berwick upon Tweed.

South Shields

7.67 South Shields is the primary retail centre of the South Tyneside Borough. The main retail areas are King Street and Waterloo Square. These two streets are home to many of the national multiple retailers such as Marks and Spencer, Debenhams, Next and British Home Stores. South Shields is also home to a popular Open Air Market which is open 3 days a week.

7.68 The South Tyneside LDF Core Strategy was adopted in June 2007 and is supported by the South Shields Town Centre and Waterfront Area Action Plan (adopted November 2008) alongside other adopted and emerging development plan documents and saved policies within the Unitary Development Plan. The key Core Strategy proposal relating to new retail development proposals is SC2. SC2 states that development proposals for retail and commercial leisure will be focused and promoted within the three town centres of South Shields, Jarrow and Hebburn. Relevant policies within the AAP include:

 SS7 Retailing Opportuntities in South Shields Centre – this policy aims to maintain and enhance South Shields as the primary retail and commercial centre in South Tyneside.

 SS8 Evening and Night time economy in South Shields – focussed on prmoting evening and night time economy attractions

 SS9 Entertainment, Leisure and Community Facilities opportunities in South Tyneside – aimed at encouraging the provision of and enhancement of a range of quality entertainment, commercial leisure and indoor sports and community facilities within South Shields.

7.69 According to the Core Strategy, land is to be allocated within, or on the edge of all three town centres to provide an additional maximum of 80,000sq m net comparison floorspace capacity across the borough and up to an additional 5,000sq m net convenience floorspace.. This includes the Frederick Street shopping centre and will seek to consolidate retail and

commercial premises into a more sustainable, compact and viable core. However, the figures included in the Core Strategy are based on data from a 2003 Retailing and Shopping Patterns Study. A more recent Retail Health and Capcity study undertaken in 2007 indicated a significantly reduced comparison goods floorspace of 33,266sq m by 2026.

7.70 Venuescore identifies South Shields as a sub-regional centre, ranked as 206th overall in the UK. This is down slightly from 2007s rank of 191.

Previous Location VENUESCORE Rank Mall Town VENUESCORE Rank (Excluding (Excluding Rank 2007 Movement MALLSCORE Grade Dominance Foodservice) Foodservice) South Shields Sub-Regional 111 206 97 208 191  19 17.1% 7.71 South Shields is indexed in line with the national average in relation to fashion orientation, market position and age makeup of its catchment. The centre is, however, more reliant on food retailing and tourism trade than the average centre according to Venuescore. This is not surprising considering the coastal nature of the town and the attraction of the town‘s open air market.

Fashion Foodservice Tourist Fashion Market Position Market Fashion Age Position Orientation Orientation Orientation Position Age Position Town Index Position Position Index Index Index Index Index Classification (Avg=100) Classification Classification (Avg=100) (Avg=100) (Avg=100) (Avg=100) (Avg=100) South Shields 106 47 28 84 Down 95 Mainstream 100 Mid Washington

7.72 Washington is the secondary centre in the Sunderland area. Developed under the ―New Towns‖ programme, Washington‘s shopping is provided within the Galleries Shopping centre. Comprising some 200 shops, Galleries is home to a substantial number of national multiples as well as independents located within the smaller stalls. Represented comparison retailers include Argos, Superdrug, New Look, JJB Sports, Boots, Clarks and Barratts. The adjacent retail park is home to Matalan, Next and Halfords among others.

7.73 The Galleries also has a substantial convenience offer, with Sainsbury, ASDA and Iceland all located within the complex and Aldi in the adjacent retail park. The development also has a leisure offer, accommodating both Gala Bingo and AMF Bowling.

7.74 Sunderland Council is currently reviewing its position regarding the publication of its Core Strategy Revised Preferred Options. The Galleries is identified as one of 3 main local centres with Sunderland City Centre and Sea Road (Fulwell).

7.75 Venuescore identified Washington as a Major District centre, ranked as 265th overall in the UK. This is up from the previous 2007 rank of 276th.

Previous Location VENUESCORE Rank Mall Town VENUESCORE Rank (Excluding (Excluding Rank 2007 Movement MALLSCORE Grade Dominance Foodservice) Foodservice) Washington Major District 86 265 83 245 276  71 82.6% 7.76 Washington is indexed in line with the national average in relation to fashion position and the age makeup of its catchment. The centre is, however, more reliant on foodservice than the average centre according to Venuescore. The fashion orientation index also suggests that Washington‘s offer is mainstream, when the affluence of the population could perhaps support a more upmarket offer.

Fashion Foodservice Tourist Fashion Market Position Market Fashion Age Position Orientation Orientation Orientation Position Age Position Town Index Position Position Index Index Index Index Index Classification (Avg=100) Classification Classification (Avg=100) (Avg=100) (Avg=100) (Avg=100) (Avg=100) Washington 61 31 24 78 Down 99 Mainstream 105 Older Bishop Auckland

7.77 Bishop Auckland is one of the major retailing centres within the County Durham area. It has 200 shops including a mix of national multiples and independent / specialist retailers. Mainstream retail representation is catered for along Newgate Street, while the south end of Newgate Street and Fore Bondgate are home to an array of specialist shops. National multiples located within the town include Marks and Spencer, Boots, WH Smith, Burtons and Dorothy Perkins.

7.78 The convenience offer within the town is predominantly provided by the two major supermarkets, Asda and Morrisons. The Local Development Framework for County Durham is in its early stages with the recent publication of the Core Strategy Issues and Options, which contains the following three relevant draft policy statements:

 S1: Bishop Auckland is identified as one of the major retailing centres in the district (with Crook). A1-A3 development will generally be permitted in the town centre.

 S2: Within Newgate Street (North) Shopping Area at ground floor level planning permission only allowed for A1 retail use only.

 S7: 1.2HA of land at Greenfields Road in Bishop Auckland is identified for development.

7.79 Venuescore identified Bishop Auckland as a Major District centre, ranked as 277th overall in the UK. This is up from the previous 2007 rank of 310.

Previous Location VENUESCORE Rank Mall Town VENUESCORE Rank (Excluding (Excluding Rank 2007 Movement MALLSCORE Grade Dominance Foodservice) Foodservice) Bishop Auckland Major District 84 277 81 253 310  16 19.0% 7.80 Bishop Auckland is indexed in line with the national average in relation to fashion orientation and age makeup of its catchment. The centre is, however, more reliant of foodservice and tourism trade than the average centre according to Venuescore. This is not surprising considering it is home to a tourist destination in Auckland Castle.

Fashion Foodservice Tourist Fashion Market Position Market Fashion Age Position Orientation Orientation Orientation Position Age Position Town Index Position Position Index Index Index Index Index Classification (Avg=100) Classification Classification (Avg=100) (Avg=100) (Avg=100) (Avg=100) (Avg=100) Bishop Auckland 106 31 25 80 Down 95 Mainstream 109 Older Ashington

7.81 Ashington is a small centre in Northumberland, once known as ―the largest mining village in the world‖ and celebrated for its association with many famous sportsmen. Its retail offer is focused on the pedestrianised Station Road, which accommodates a range of local, regional and national operators including Argos, H Samuel, Burton and Dorothy Perkins. The town‘s largest foodstore is Asda on Lyntonville Terrace, which also has a large proportion of floorspace devoted to comparison goods.

7.82 Retail Analysis undertaken in January 2010 by White Young Green suggests that the centre is currently underperforming based on existing expenditure and retail trends. The report specifically identifies capacity for additional floorspace, including a major opportunity for a new foodstore within the town centre.

Peterlee

7.83 Peterlee is situated in the District of Easington in County Durham. The Castle Dene Shopping Centre is situated in the heart of the town, and accounts for the vast majority of its retail floorspace. The centre is the location of many national comparison retailers including Boots, Argos, Wilkinsons and New Look. In addition, it has a large convenience offer including Asda, Aldi, Farmfoods and Iceland.

7.84 The Local Development Framework for County Durham is in its very earliest of stages and, as such, the Easington Local Plan, despite its age, is still relevant. Policy 101 states that Peterlee, as the main retailing centre (alongside Seaham) will be protected and promoted. Further shopping and leisure development will be considered only within the centre. There are currently three food store schemes pending consideration on the edge and in the centre of the town.

Berwick-upon-Tweed

7.85 Berwick is a historic market town and the northernmost town in England. The retail offer is focussed around the High Street and Mary Gate, which is the location of the majority of national multiples within the centre.

7.86 There is a substantial retail park in nearby Tweedmouth, comprising of large format units for a mix of traditional town centre and non-town centre uses. Current tenants include Argos, Homebase, Currys, Halfords and Carpet Right.

7.87 Berwick has a substantial quantity of convenience space. There is a Somerfield and Marks and Spencer Simply Food within the town centre, and Aldi on the outskirts and 3 major supermarkets within the vicinity. Asda is located in the old Co-operative building near Tweedmouth Retail Park, Morrisons is located on Loaning Meadows and Tesco has just opened a new 30,000 sq ft store at Tweedside Trading Estate. This is in addition to the twice weekly market days and monthly famers market.

8.0 Strategy Recommendations

8.1 In this section, we draw out the spatial policy implications that arise from the qualitative and quantitative analysis undertaken in this study. We emphasise that our recommendations focus on the key strategic issues for town centre uses and are intended to stimulate debate to inform policy development. They are not intended to be a prescription of policy. Performance of centres

8.2 We have assessed the performance of each of the 9 main centres and 6 significant other centres within the North East, in relation to a number of indicators. Evidence of trends in the Venuescore rankings indicate that some centres are in decline, with Sunderland in particular slipping from 97th to 111th place between 2008 and 2009.

8.3 Focussing on the 15 assessed centres within the North East, the following key indicators have emerged:

 In terms of floorspace, Newcastle is the major commercial and retailing centre in the North East and has the highest quantity of floorspace. It is followed by Middlesbrough, then MetroCentre and Sunderland. Redcar and Durham have the lowest level of floorspace.

 The pattern of comparison goods sales across the centres broadly follows that of the floor space figures with Newcastle, MetroCentre and Middlesbrough achieving the highest levels. Redcar, Hartlepool and Stockton could be said to be underperforming when viewing sales in contrast with floorspace levels.

 The Venuescores for each of the centres reflect the pattern for comparison goods sales, with the larger centres of Newcastle, MetroCentre, Middlesbrough, Darlington and Sunderland performing best. One slight anomaly within this pattern is Durham City. Durham has a lower level of floorspace available, more in line with smaller centres such as Redcar, yet it achieves a relatively high sales density, above that achieved in Stockton Redcar and Hartlepool. This may reflect Durham‘s status as a tourist destination. Whilst the availability of floor space in the Centre is constrained, the overall quality of the retail offer is high, resulting in a strong sales density.

 Analysis of retail parks and superstores within the North East shows that these play a major role in comparison goods provision. When amalgamated, sales from retail parks and superstores in the north of the study area total more than sales from MetroCentre. Likewise, sales from retail parks and superstores in the south of the study area total more than sales from Middlesbrough town centre. When added together, retail parks and superstores in the North East enjoy a larger combined market share for comparison goods sales than even the largest city centre (Newcastle) in the region.

 With the exception of Newcastle, the region‘s centres are under-provided with leisure facilities, with many having suffered from the growth of out of town centre operations, such as the Aquatic Centre in Sunderland.

8.4 The above analysis shows that in terms of the existing actual (rather than policy-related) hierarchy of centres, Newcastle City Centre is clearly at the top, as a major regional centre. Whilst not a town centre, MetroCentre is clearly a shopping centre of regional status. Second level centres are Middlesbrough, Darlington and Sunderland, each of which is of sub-regional status and importance. Below these, the next group of centres comprises Durham, Stockton-

on-Tees, Redcar, Hartlepool, South Shields, Washington and Bishop Auckland town centres (and a number of other centres that were not included in our study sample). Ashington, Peterlee and Berwick-upon-Tweed are of more local significance within their immediate catchment areas. Finally, the many small town, district and local centres not explicitly included in our analysis would lie at the lowest levels in the hierarchy.

8.5 Sitting beside such a hierarchy are the non-central retail parks and superstores. As indicated above, these now attract very substantial trade. The largest, (Team Valley Retail World in Gateshead, Kingston Park in Newcastle, Silverlink Retail Park in North Tyneside, and Teesside Shopping Park near Stockton-on-Tees) are now of sub-regional significance, some attract more comparison goods expenditure than medium sized town centres and are drawing trade away from the region‘s main town centres.

8.6 The above diagram illustrates the hierarchy of centres as it currently exists. It is not intended to be a recommendation for strategic planning policies to formalise this hierarchy in development plans. In particular, the out-of-centre retail parks and superstores would have no place in a policy-related hierarchy of centres, as they are not multi-functional designated town centres. However, local planning authorities would need to have regard to the scale and strength of existing town centres as illustrated by the above factual hierarchy, in finding ways to accommodate identified needs for new retail and leisure development.

Emerging Trends

8.7 In summary, the North East region has a wide range of city centre, out of town, town centre and smaller shopping and leisure venues. The pattern of retail and leisure distribution broadly follows the pattern of settlement distribution with the two conurbations of Tyne and Wear and Tees Valley having the largest number of centres being ranked in the higher categories of the Venuescore definitions.

8.8 Our analysis of retail trends provides the following pointers for the North East for future strategic planning:

 Apart from food stores, general retail development is likely to be depressed for at least the next two or three years as a result of reduced retailer demand and viability

 Substantial comparison goods retail developments will be possible only in the larger town centres in the region, meaning that retail dominance of the larger centres, particularly Newcastle, Metrocentre, Middlesbrough and Darlington will continue and may increase

 In many smaller centres, rental values will be too low to make new schemes financially viable

 In order to protect existing centres, it will be important to resist pressure for more out of centre retail development in retail parks, and for relaxations of bulky goods conditions or conditions preventing food retailing

 The continued diversification of food store operators into comparison goods retail is set to continue, resulting in further erosion of trade from traditional comparison goods operators.

 Analysis of leisure trends indicate that the sector has been badly affected by the recession but that there remains some resilience with requirements from operators across a number of sectors. However, these requirements tend to be concentrated in a few key locations such as Newcastle City Centre. In the future, the prospects remain strong in sectors such as fitness and licensed activities, reflecting broader consumer trends toward growth in these sectors.

 In terms of emerging trends in policy, PPS4 is anticipated to remain the key policy driver until such time as the proposed new National Planning Framework is in place, albeit with references to Regional Strategy being no longer valid. Whilst the requirement to take a strategic approach to defining a spatial hierarchy is no longer required, the Government is, however, clear that local authorities should continue to work together on cross-border issues and that existing regional information and data is still available for use in the preparation of development plans. The Government is encouraging authorities to work as sub-regional partnerships, through the introduction of LEPs. Other policy drivers are as follows:

 There is to be a contraction in public sector spending which risks undermining levels of demand in town centres across the North East, particularly given the reliance of many centres on public sector employment

 Promotion of the Government‘s localism agenda may risk undermining inter local authority/sub-regional working

 There is expected to be an ever greater emphasis on sustainability, reinforcing the emphasis on town centres as the focus for retail, leisure, office and other activities, and also specific pressures for reducing carbon dioxide emissions.

Physical Capacity Versus Requirements

8.9 The table below summarises the results of our estimates of retail requirements set against existing physical capacity in the centres we have examined.

Scenario/Location 2015 2020 2025 2030 Physical capacity to accommodate growth

Newcastle City 15,500 40,800 66,300 96,100 East Pilgrim St – 17 ha site for Centre redevelopment. Newgate Centre – redevelopment of existing retail space to provide leisure. Newcastle Brewery Site – leisure office and other commercial. Stephenson Quarter – 4 ha, office, hotel and retail.

Newcastle has many development opportunities, with East Pilgrim Street site representing the best retail opportunity within a site boundary of 17 hectares. MetroCentre 10,600 28,000 45,400 65,800 The relocation of the cinema from blue mall to yellow provided an opportunity to remodel existing space but there is no further scope to expand/create additional space. Middlesbrough Town 6,400 16,900 27,400 39,700 The extended town centre boundary, Centre including part of Cannon Park (26 ha), provides capacity for new retail and leisure development within the town centre.

Darlington Town 4,400 11,400 18,400 26,800 The proposed Oval development if Centre implemented will provide a 30 store shopping centre, anchored by Debenhams, in addition to a 9 screen cinema and a range of bars and restaurants. There are also 2 good sized units free as a result of Next‘s relocation to the former Woolworths store. Sunderland City 4,100 11,200 18,200 26,300 The Vaux Brewery site - 167,250m² of Centre developable floor space for office, residential and hotel uses with ancillary leisure and retail. Farringdon Row – intended to complement the Vaux site. Holmeside Triangle site extends to over 2.8 ha, likely to provide leisure and retail uses. Sunniside – east of the city centre, leisure and hotel provision. Sunderland Retail Park - Likely to accommodate a Tesco Superstore and

ancillary retail. Stadium Village 25ha – sports and Leisure development. Dalton Park - cinema, a supermarket, a hotel, food and beverage units as well as a petrol filling station. Crowtree Leisure Centre – potential redevelopment site awaiting expansion of the existing Bridges shopping centre. Durham City Centre 1,700 4,500 7,400 10,700 Reflecting the constrained nature of the City Centre, the 2020 Masterplan identifies minimal site provision for new development within the city centre. The former Waitrose store within the Gates shopping is currently vacant providing a large space, however its location within the secondary retail area of town results in this unit not being attractive to other retail occupiers. The redevelopment of North Road, a key gateway site to Durham provides a further opportunity. Stockton-on-Tees 2,600 6,900 11,100 16,100 Sites identified within the Town centre Town Centre masterplan include: Castlegate centre, Wellington Sq multi storey, Globe Theatre, Dovecot Street/ West Row, Zanzibar/West Row, Southern Gateway site, municipal offices site. Redcar Town Centre 1,200 3,200 5,100 7,400 The site of the former Kwik save building may provide an opportunity for further development. No other sites were apparent at the time of survey within the town centre. Hartlepool Town 2,000 5,300 8,500 12,400 Jackson Landing building, Hartlepool Centre Marine to be reconfigured.

8.10 The key messages arising in relation to the above are as follows:

 In the main, all key centres have adequate capacity to accommodate the indicated levels of retail requirements, through sites either earmarked through Development Plans or other development opportunities  The challenge that most centres face is stimulating demand to make new development schemes viable. East Pilgrim Street in Newcastle, Holmeside Triangle in Sunderland and Cannon Park in Middlesbrough are three key schemes that, if delivered will make a major contribution to enhancing these key town centres. However, the lack of demand risks undermining these schemes.  Durham is the area where there is a shortage of site capacity to facilitate expansion and although its requirements are relatively small, this is because it is a small centre. Given the policy impetus of growth plans, this might be the location in which new allocations are required

8.11 With regard to leisure requirements, in agreement with ONE, we have not modelled floor space requirements, as it is not possible to do so with any accuracy given the volatile nature

of the sector. Companies operating within the leisure market face an uncertain market influenced by a range of macro-economic drivers. Such volatile market conditions result from unstable conditions of supply and demand with price fluctuations experienced periodically and demand for facilities varying on a month on month basis.

8.12 Our approach has been to focus on an assessment of the market (reviewing market requirements, speaking to agents and leisure operators and benchmarking the subject towns with other locations to identify opportunities for new provision). It is clear that there are gaps in the offer in respect of a number of centres across the North East, particularly outside of Newcastle, both in restaurants and bars and also the large scale commercial leisure operators such as cinemas, casinos and event venues. This is notable in the Tees Valley in particular.

8.13 However, we consider it important that sites for leisure provision are allocated in all centres across the North East in order to ensure that centres have the ability to attract and respond to the market‘s changing requirements to meet future leisure industry needs. The lack of suitable town centre site opportunities is likely to increase pressure for leisure activities to go out of town.

8.14 There is also a gap in the provision of a commercial regional leisure facility, which can attract visitors from outside the region. An example would be the proposed indoor ski slope. The location and scale of future leisure provision requires careful consideration, however, as the impacts of large scale leisure parks can be far reaching in terms of their geographical influence. Existing large scale leisure provision within the North East tends to be concentrated in existing shopping centres (such as the Gate or the Metrocentre) or within shopping Parks (such as Teesside shopping park). As yet there has not been the development of a large scale out-of-town leisure destination such as Xscape at Castleford (which houses a 175m long ski slope, climbing walls, ice climbing, skate park, 14 screen cinema, ten pin bowling, shops, air park, restaurants). Whilst there may be a market for the creation of such a leisure facility within the region in future, the impact of such facilities on existing town and city centres should be fully understood. Policy Implications

Large versus small centres

8.15 The forecasts show that if current shopping and leisure patterns continue, and new floorspace is located in accordance with forecast capacity, the larger centres will grow substantially larger, thus increasing their dominance over the smaller centres. The trend of new investment in town centres going to larger rather than smaller centres has been proceeding for at least the last 40 years. However, in recent years it may have accelerated. Thus most of the new developments which opened in the last 5 years or so in the UK have been in large centres, such as Leicester, Belfast, Liverpool, Birmingham, Bristol, Plymouth and Exeter.

8.16 It is difficult to say whether or not this centralisation trend assists or detracts from sustainability objectives of reducing dependence on private cars for shopping. On the one hand, larger centres with a wider range of shops and services have greater potential than smaller centres for one trip to serve several purposes. Larger centres are also more economic to serve by public transport than are smaller centres. On the other hand, a smaller number of dominant centres means that shoppers have to travel further to access the shops and services they require. However, it seems very likely that there will be continuing real increases in the cost of fuel in the medium to long term, coupled with financial constraints on investment in new public transport facilities.

8.17 A strategic policy of focusing as much retail growth as possible into the more isolated or peripheral of the smaller centres could therefore help to achieve sustainability objectives. This suggests a strategy to build up retailing and retail-related services in the town centres (not out-of-centre) of towns such as Berwick-upon-Tweed, Alnwick, Ashington, Hexham, Peterlee, and Hartlepool. However, it must be recognised that such growth could not be large scale, owing to limited retailer demand, low rental values; and the difficulty of assembling suitable town centre and close edge-of-centre sites for new retail development without disrupting the historic fabric of some town centres, and being able to secure the support of local communities.

8.18 At the same time, the most accessible of the larger town centres in the region should also be assigned growth and development, coupled with public transport improvements wherever possible; so that they increasingly become the first choice location for multi-purpose, high level shopping visits, particularly by public transport. This would include Newcastle City Centre, to improve its status as a major regional centre which can compete effectively with the other regional capitals for high level retailing. It would also include the principal sub-regional centres of Sunderland, Middlesbrough and Darlington. These latter three centres are all large enough to attract further retail investment, and have high enough shop rental values for it to become potentially viable in financial terms, once growth of the economy gathers pace.

North versus south

8.19 Tyneside/Wearside currently has a greater concentration of population and comparison goods retailing and leisure than Teesside/south Durham. The concentration of retailing and leisure in the northern of these two sub-regions is due to the strength of Newcastle as the regional capital, and the existence of MetroCentre as the only free-standing, non-central regional shopping centre in the North-East Region. Continued growth of Newcastle City Centre (coupled with restrictions on further extension of MetroCentre) will be essential to maintain its status as a major regional centre in retail terms.

8.20 It will also be necessary for strategic growth of retailing to be located in the southern sub- region, and in a concentrated manner, in order to avoid the north-south balance tipping much further in Newcastle‘s favour. The highest forecast growth of population is in catchment zones 1, 2, 7, 9 and 10. Of these, Zones 1 and 10 have only relatively small populations, spread over wide areas. The growth in Zone 2 supports a strategy of growth in Newcastle City Centre (and in small town centres such as Ashington and North Shields). However, Zones 7 and 9 are in the south of the region, and together have a large population. This indicates a strategy of concentrating strategic growth into those town centres in the south which have the potential to attract and accommodate it, i.e. Middlesbrough and Darlington town centres; rather than attempting to spread it thinly across a larger number of smaller centres, most of which would be unlikely to be able to achieve financially viable new retail development in their town centres.

Town centre versus out-of-centre development

8.21 The retail forecasts clearly show the substantial degree to which non-central retail parks and food/non-food superstores have grown (over little more than 30 years) in the region; and their (in some cases dominant) scale in relation to the town centres. Whilst it probably would not have been physically possible to create new town centre retail floorspace on the scale necessary to absorb the full growth in trade which they represent, nevertheless their meteoric growth has prevented some town centres developing in ways which they otherwise might have. Put simply, town centre retail development is slow, expensive and difficult; whereas

out-of-centre retail development is relatively quick, low cost and easy. However, the more that the easy short-term option of out-of-centre retailing is taken, the more expenditure is decentralised, and the more difficult it becomes to achieve the town centre development which is a higher priority under the sequential approach of PPS4.

8.22 Sustainability is now at the heart of national planning policies; and the sequential approach of PPS4 is aimed at improving sustainability by locating new retail development in or on the edge of town centres rather than out-of-centre. This is because town centres are more widely accessible by public transport, and because as multi-functional destinations, they enable one journey to serve several purposes. Thus town centre retail and leisure development reduces the need to travel, particularly by car, relative to out-of-centre development. Town centre development also aids social inclusion, by making shopping and leisure facilities more accessible to people who do not have the use of a car. In terms of employment generation, town centre development may also be better, and is certainly no worse than out-of-centre development. Whilst putative out-of-centre developers and retailers usually promise new jobs, many of these are often merely transferred from town centres, which can suffer from closure of more labour-intensive shops. The short-term employment benefits which are often claimed for out-of-centre retailing therefore do not always materialise; and in the long term, replacement of town centre retailing by out-of-centre retailing will be unlikely to result in increased employment. In terms of sustainability, social inclusion and economic development therefore, town centre retail development is generally preferable to out-of-centre development, hence the support for it in PPS4.

8.23 This suggests that in view of the very large scale of out-of-centre retailing which has already occurred in the region, future strategy should be to concentrate new retail floorspace (including that forecast above as non-central) into town centres (in accordance with the sequential approach) as much as possible, rather than allowing it out-of-centre. The current period of slow economic growth, and short-term limitations on the capacity for new retail floorspace will provide an opportunity for (the often lengthy) preparation for new town centre developments. Provided that further out-of-centre comparison goods retailing such as extensions to food/non-food superstores for more comparison goods floorspace, new superstores, and relaxations of bulky goods restrictions on retail parks are prevented, such preparations should enable new town centre developments in the region to hit the market and open at a time of accelerating growth. It should help to maximise the potential for and success of such new developments. Restrictions on further out-of-centre retail development, including extensions to food superstores to sell more comparison goods, and on relaxation of bulky goods restrictions on existing retail parks, will therefore be essential across the region, as a strategic policy, if new town centre development is to be achievable in most cases.

8.24 It will also be essential for local authorities to engage actively in positive planning for new town centre and edge of centre developments. This will assist them to resist unwanted out-of- centre retailing; by enabling them to demonstrate that they are making available opportunities for new retail development of a higher priority in terms of the sequential approach – which would be put at risk by allowing out-of-centre retail development. It means that wherever commercially realistic and appropriate in other respects they must:

8.25 Put in place development plan policies which identify sites where they intend to achieve new town centre and edge-of-centre developments.

8.26 Actively market such sites to developers, appoint development partners, jointly work up and grant planning permission for development schemes, and enter into development agreements

with their development partners.

8.27 Commit to site assembly, if necessary by means of compulsory purchase, with the costs underwritten by their development partners.

8.28 Undertake or facilitate enabling works such as infrastructure improvements; and other works in the town centre which maximise the benefit from the development to the town centre as a whole, for example pedestrianisation or improved pedestrian linkages between the development and the pre-existing town centre.

New centres versus existing centres

8.29 In the region as a whole, population growth is forecast by NERIP to be in the region of 2%, over the next 20 years. This is modest growth. The highest rate of growth in any catchment zone is 8% in Zone 7, followed by 6% in Zone 9. These two zones cover north Teesside and south Durham. However, even this level of growth is modest, and unlikely to be sufficient for substantial new towns to be developed. This area is fairly compact and has good road communications. Only if one or more substantial new settlements were to be developed, would it be realistic to consider developing new town centres for them. Otherwise, if population growth is located in expansion of existing settlements, further development of their existing town centres would be more commercially realistic.

8.30 New local centres might be needed to serve new residential neighbourhoods, and will probably need to be anchored by new foodstores. However, it will be important to ensure as a matter of strategic policy that these do not have such a large scale of comparison goods retailing that they threaten existing town centres, or preclude new town centre development. There have been examples of new district centres elsewhere on scales which (with hindsight) were too large, and which have subsequently been extended still further; with the result that they have become strong competitors with established town centres. It will be important to avoid this in the north-east region, where some town centres are performing at less than their full potential. In terms of strategic policy therefore, we consider that there should be a presumption in favour of locating new comparison goods retail development in existing town centres wherever possible. Only in exceptional circumstances of a major new settlement will it be necessary to consider a planned new town centre. The low forecast population growth, even in the south of the region, suggests it is unlikely that this will be needed.

Planning for Large Scale Leisure Requirements

8.31 The trend towards large scale leisure facilities (particularly from cinema, bowling and casino operators) requires large sites and a coordinated approach across borough boundaries. Whilst Newcastle currently represents the regional capital and key centre for such facilities, consideration is required as to whether and how the Tees Valley/Darlington area can be strengthened in this regard. At the local level, all local authorities can plan to promote leisure activities such as but not exhaustively through providing for dedicated leisure quarters in their LDFs to support restaurants and bars and allocate/assemble sites for commercial operators.

Strategic Town Centre Issues

8.32 Many town centre policy issues are of a strategic nature and require a coordinated response across borough boundaries. This is particularly the case where centres draw trade across borough boundaries and in relation to the planning of new schemes of a strategic scale such as major leisure facilities and new retail developments. In accordance with the emerging Local Enterprise Partnership structure, and more significantly the new duty for local

authorities to work across boundaries on planning issues, we consider it necessary that strategic planning of town centre issues takes place at this level to ensure a coordinated approach.

Public Sector Response

8.33 In view of the difficulties in getting schemes off the ground in the current and foreseeable market, local authorities should consider taking more of an enabling role through using CPO powers and considering delivery vehicles such as TIFFs and CIL to facilitate delivery. They should also consider the use of intervening in failing centres through acquisition using their ability to borrow at low rates against projected income streams

8.34 Local Economic Partnerships should support local retailers seeking to establish an internet sales capability to give them national reach. It should also support initiatives by smaller town centres to create a viable internet presence by establishing a town centre web ring. The Strategy should also facilitate and encourage delivery of low cost business support services to independent retailers and service businesses, most of which are located in small town and district centres, and the secondary shopping areas of large town centres.

Rationalisation of Public Facilities

8.35 October‘s Comprehensive Spending Review heralded the rationalisation of public sector facilities as local authorities and other governmental bodies seek to make efficiency savings. Whilst this represents a challenge and a threat to town centres, it may also be an opportunity for local authorities to consider relocating facilities such as leisure centres, libraries and administrative offices into town centres.

Use and Review of the Forecasts

8.36 We must emphasise that all expenditure based forecasts of future shop floorspace capacity are based on imperfect data and contain a number of assumptions. Our forecasts set out in this report are based on the most up-to-date and reliable information currently available to us. However, they are intended as an indication of the likely order of magnitude of future shop floorspace capacity (if forecast trends are realised) rather than as growth targets or rigid limits to future growth. The forecasts should be periodically revised as necessary by means of sub- regional or local retail studies, as advised above, in the light of actual population and expenditure growth, and as development proceeds and its effects become measurable. The retail sales estimates and retail capacity forecasts in this report are not intended to be the sole source of retail and leisure evidence for local development frameworks, or to be used as the sole basis for decisions on individual planning applications. They are suitable and intended to supplement local level evidence and to guide strategic planning in the region as a whole.

Recommendations for Specific Centres

8.37 In the short to medium term, substantial comparison goods based retail developments are likely to only be possible in the larger town centres in the region, meaning that retail dominance of the larger centres, particularly Newcastle, Metrocentre, Middlesbrough and Darlington will continue and may increase.

8.38 In order to protect existing centres, it will be important to resist pressure for more out of centre retail development in retail parks, and for relaxations of bulky goods conditions or conditions preventing food retailing. The continued diversification of food store operators into comparison goods retail is set to continue, resulting in further erosion of trade from traditional

comparison goods operators and this should be borne in mind when assessing applications for new food stores in out of town and edge of town sites.

8.39 These points are valid across the whole region and in particular in relation to the two city regions of Tyne and Wear and Teesside. In the ‗middle ground‘ area between the two city regions these issues are equally important. Lack of physical capacity for growth in Durham should not be seen as an opportunity to extend or relax planning conditions in neighbouring retail parks. Instead it may be more appropriate to consider directing any potential increase in demand from retailers towards the western area of Durham whilst also seeking to bolster alternative town centre locations within the vicinity such as Darlington and Bishop Auckland in order to strengthen the offer in this location.

Individual Centres

8.40 Across all of the key centres within the North East the role of each individual local authority will be critical in ensuring their future success. Local authorities will play a vital role not only in developing planning policies and related strategies but also in identifying opportunities, supporting existing businesses helping developers to assemble sites and resisting development outside of existing town centres. For smaller centres in particular it will also be important for local authorities and their partners, such as town centre management companies to recognise and promote the value of a centre‘s distinctiveness.

Darlington

8.41 In the main, Darlington town centre is performing reasonably well, with existing shopping facilities fairing well and new development opportunities within the pipeline. The current economic climate and cuts to government spending may impact upon plans to implement The Oval scheme (we understand that it is currently being reviewed) and as such it is important that during this period in particular, the Council continue to enforce policies to resist competing proposals elsewhere in the Borough which could directly undermine the town centre.

8.42 The retail-led scheme on Commercial Street is the key opportunity to increase the town‘s retail offer and, specifically, address the current lack of supply in a flexible format capable of meeting the needs of a variety of requirements, specifically those with a large format which are currently not supported by existing supply.

8.43 Policies for the town centre should focus upon supporting existing units within the centre and continuing to promote the development of a range of independent occupiers. The development of the Oval should continue to be supported to ensure the delivery of a range of larger floor plates to attract larger retailers and maintain the town‘s position in competition with nearby retail parks.

Durham

8.44 Durham City Centre is particularly constrained in respect of physical opportunities to expand the existing retail and leisure offer. The secondary west end of the City has scope for improvement and to this end policies should support and promote the further development of the comparison offering around North Road.

8.45 Within the primary shopping areas the focus of policy should be on protecting, enhancing and further promoting the existing retail offer, in respect of the larger retailers located within the town centre but particularly in respect of independent and niche retailers. This approach will

key to ensuring that Durham remains distinctive in its retail and leisure offer, allowing it to compete strongly with out of town retail parks.

8.46 The impact of out of town retail parks and the close proximity of the City to the MetroCentre has been considerable. Policies should therefore restrict further development at these locations and should resist applications to relax bulky goods conditions on existing retail warehouses.

MetroCentre

8.47 The MetroCentre continues to perform strongly, despite being impacted by the current economic climate. Whilst MetroCentre should be allowed to change and modernise over time, subject to national policy, major retail development should be directed elsewhere and principally to Newcastle City Centre Improvements to the retail and leisure offer within the MetroCentre may come over time, with further leisure opportunities within the Yellow Mall likely to be sought.

Middlesbrough

8.48 Middlesbrough Town Centre is in direct competition with surrounding retail parks, in particular Teesside Retail Park and as such must increase opportunities for new development if it is to hold its position as the main town centre in the southern part of the study area. Canon Park represents a major opportunity to extend the town centre retail offer, increasing retail capacity and attracting new investment.

8.49 Opportunities to create larger floorplates within the existing town centre retail stock should be explored. This would help to alleviate competition from out of town locations.

8.50 Further consolidation and development of the cluster of high end, independent fashion retailers on Linthorpe Road should be encouraged, in order to further differentiate the offer of the Town Centre from neighbouring retail parks.

8.51 There is scope to promote and further develop the town‘s leisure offer which is currently considered to be under represented in respect of restaurants and large scale commercial leisure.

8.52 Improvements to town centre parking in the Linthorpe Road area should be explored in order to alleviate existing problems and further support businesses within that area.

8.53 Environmental Improvements in the Albert Road area would bring the quality of streetscene within this part of the Town further in line with rest of the Town Centre which currently enjoys a high standard of public realm.

Newcastle

8.54 Newcastle City Centre is the major retail and commercial centre for the North East. Recent City Centre development has improved the retail offer of the city substantially, with the Eldon Square extension introducing a good variety of retailers to the city which were previously notably absent. In particular the presence of Debenhams as the anchor store within the extension has served to fill a noticeable gap within the city‘s retail offer.

8.55 Despite these improvements there is still considerable scope to improve the city‘s retail offer, particulary in respect of high end fashion. The proposed development of East Pilgrim Street will extend the City Centre retail offer and increase retail capacity, providing an opportunity to

address the issue above. Other opportunity sites within the city should be focussed upon achieving the continuation of mixed use development to develop convenience retail and to further develop the city‘s leisure offer.

8.56 The continuing success of out of centre retail parks around the city, including the MetroCentre will continue to influence the success of the City Centre. Policies should restrict further development at these locations and should resist applications to relax bulky goods conditions on existing retail warehouses.

Redcar

8.57 Within Redcar policies must focus on consolidating and enhancing the current town centre offer to protect its longer term viability. The current development proposals for the HUB, will see the loss of retail floorspace through conversion into business spaces for the creative industries. The local authority will play an important role in ensuring that displaced businesses are supported and accommodated within alternative premises.

Stockton

8.58 The impact of Middlesbrough and Teesside Retail Park on Stockton Town Centre is considerable and as such it is vital that Stockton consolidates and enhances existing facilities in order to support its immediate catchment whilst playing a complementary role to its nearby competitors.

8.59 The Stockton Town Centre Masterplan identifies a series of potential development sites within the town centre. A key theme within the Masterplan is the potential to introduce niche retailing to the centre, catering for the needs of the local ethnic population and student community. These aims seem sensible and would allow the town to further diversify its offer and distinguish it from neighbouring retail parks. It would also be appropriate for the local authority to identify opportunities for the creation of retail units with larger floorplates conversant with modern retailers requirements.

8.60 Policies should strongly restrict further development at Teesside Retail Park and should resist applications to relax bulky goods conditions on existing retail warehouses.

Sunderland

8.61 Like other centres within the North East, Sunderland must ensure that policy development is geared towards the protection and enhancement of the city centre as the key retail and leisure destination, resisting competition from competing retail parks such as Dalton Park. Sunderland also faces stiff competition from Newcastle and the MetroCentre and as such it is important that alongside larger retailers, smaller independent retailers are retained and attracted in order to ensure a diverse and unique shopping experience for users of the town centre.

8.62 There is no shortage of availability of sites for development within the city centre, as evidenced within the table above. As such it is important that a clear vision and strategy for implementation is formulated in order to ensure that a series of cohesive and viable solutions are delivered, prioritising where necessary those schemes that have the best chance of deliverability.

Hartlepool

8.63 The evening economy and restaurant / cafe sector is somewhat underrepresented with a

distinct lack of restaurants in the town centre. There is also a shortage of mainstream leisure facilities. Opportunities to introduce further occupiers of this nature should be considered.

8.64 The consideration of options for Mill House Leisure Centre presents an opportunity for the creation of a sports village concept through developing linkages with the adjoining Hartlepool United Football Club.

8.65 The physical dominance Middleton Grange of the shopping centre is a barrier to pedestrian connectivity. Opportunities to improve connectivity should be explored. Recommendations in relation to Leisure provision

Newcastle

8.66 Newcastle is effectively putting new hotel provision into place with new hotel developments being built at the former brewery site and pipeline developments at the Stephenson Quarter, Newgate Shopping Centre and Central Station area. A continuation of this policy is encouraged to help improve provision of four star and boutique hotels.

8.67 With regards to Bars and restaurants overall our analysis has suggested that the city does not perform as favourably in the casual dining/bars and restaurants market as might be expected. This sector of the leisure industry is proving popular in the current market and as such there may be scope for the expansion of this type of activity within the City.

8.68 In terms of health and fitness, overall it can be seen that the major health operators are not present in Newcastle and the budget gym operators do not appear to have broken through. With the working and student population of the city, this is perhaps surprising and may be down to the lack of suitable space. There is currently a requirement from Virgin Gym, also suggesting that there is possible scope for a further facility within the City. Appropriate sites would be near office locations.

8.69 We consider there to be a limited cinema offer for a City of this size, with Warner Brothers and The Odeon having vacated the City Centre. This view is supported by the fact that there is currently a known requirement for a Vue cinema within Newcastle City Centre.

8.70 Aspers currently who already have a casino in Newcastle are looking to expand their provision in this location, which may suggest scope for potential further provision within the city.

Metrocentre

8.71 Whilst the MetroCentre Qube is already well provided for in terms of big box leisure, there is perhaps some scope for increasing the restaurant offer.

8.72 In the area surrounding the MetroCentre there is also potential for hotels and leisure facilities which could be provided relatively cheaply in this location in comparison to city centre locations, however this could contravene PPS4 with these requirements beings perhaps better suited to Newcastle and Gateshead town centres and the Quayside area. Its good access to Newcastle and Gateshead and lends itself to further potential hotel use.

Sunderland

8.73 It is recommended that, as and when the market dictates, both Stadium Village and Sunderland City Centre should include provisions for hotel developments, particularly to deal with the uses proposed at Vaux and Farringdon Row.

8.74 The overall provision of restaurants and cafes within the city centre is poor and opportunities to increase provision of these facilities should be encouraged.

8.75 Whilst there are a number of gyms present within the City, private sector representation from main operators is relatively poor, which is surprising given the high student population. This may indicate a gap in the market for further development of such facilities.

Durham

8.76 The City of Durham is a popular leisure destination with students and tourists. With regards to big box leisure operations, health and fitness and hotel provision, the city is performing well. There is scope to improve the night-time economy within the city, in order to claw back some of the trade currently going to neighbouring Newcastle and Sunderland, which have proven popular with students. Mixed use developments with extra provision for bars and restaurants may be a suitable use for the area around Freeman's Quay and the former Ice Rink.

Stockton

8.77 Stockton town centre currently suffers from its proximity to the successful Teesside Leisure Park. This is a well documented issue which the Borough Council is aware of. There may be some scope to attract further operators from the casual dining sector into the town centre and the town centre masterplan usefully highlights opportunity sites and premises for purposes such as this.

8.78 The Tees Valley Hotel Futures report states that there is demand for a branded 3 / 4 star hotel and one budget hotel in the Stockton / Middlesbrough area by 2016. We believe the branded 3 / 4 star is more likely to be provided in Middlesbrough, although there is likely to be capacity for a new budget hotel in Stockton. A site should be identified in order to accommodate this opportunity.

Darlington

8.79 The Commercial Street development offers an opportunity to address many of Darlington's current weaknesses in a relatively strong centre. We recommend that at least part of the Commercial Street development should look to address the lack of large format retail units within the town centre and consideration should be given to the potential to provide space for further leisure uses in this area.

8.80 The Tees Valley Hotel Futures report states that there is immediate potential for the Premier Inn to expand. In addition it identifies scope for a small boutique hotel in the town centre.

8.81 The town has representation from just one of the main health and fitness operators, perhaps suggesting that there is scope for further provision of this type of offer within the town. We are not, however, aware of any requirements from health centre proposals at present.

8.82 The town also has a bingo hall, a cinema and a theatre but is lacking a ten pin bowling alley. There may be scope to provide such a facility although we are unaware of any requirements from operators for this type of facility within Darlington at present.

Middlesbrough

8.83 The recent extension of the town boundary to include part of Cannon Park releases an important gateway site for retail led redevelopment which could include an element of leisure provision. The redevelopment of Middlehaven also offers an opportunity to introduce more

leisure into the town centre.

8.84 We consider that a 3 star branded hotel could potentially be developed in Middlesbrough. There may also be scope for further provision of bars and restaurants within the town centre.

8.85 Redcar

8.86 Whilst we consider that Redcar is performing relatively well from a retail perspective, some of the existing town centre leisure offer is beginning to appear dated. Policies should focus upon improving the visual impact of the current facilities.

8.87 There were no growth projections run for Redcar within the Tees Valley Hotel Futures report, however, the report states that while there is potential for the development of a budget hotel in Redcar it is likely to be to the detriment of existing providers (B&Bs and guest houses). This analysis is borne out by our gap analysis which clearly illustrates that the main hotel operators are currently not represented in Redcar. The nearest main operator hotel is a Premier Inn located in nearby Guisbrough.

8.88 There are a number of pubs within the town and several hot food take aways and restaurants, however, overall provision across the licensed retail sector is poor, with limited choice and no interest from multiple restaurant operators. Whilst there are no known requirements from restaurant operators within the town there may be scope to attract further operators to the town.

Hartlepool

8.89 The Tees Valley Hotel Futures report identifies demand for 1 new site by 2016 plus immediate potential for the expansion of the Premier Inn.

8.90 Hartlepool has the potential to develop its restaurant offer further and there is very little by way of restaurants in the pedestrianised areas of the town centre.

8.91 Jacksons Landing, while suffering from well documented problems, still represents a good quality site for a mix of uses potentially including leisure and a hotel.