Estates Gazette (subsequently translated into Dutch as “Sprong naar groene winkelcentra” for the magazine Building Innovation)

14/07/2007

Wigan doesn’t have many claims to fame. Apart from its pier and its Premiership football team’s recent narrow escape from relegation, the town has generally done little to stimulate the interest of the news media.

In years to come, Wigan may be remembered for something else. Manchester developer Modus is creating Britain’s – possibly the world’s – first carbon-neutral shopping centre in the Greater Manchester town.

By offsetting the CO² produced during the construction of the Grand Arcade scheme with investment in wind farms in India and Inner Mongolia, the developer is claiming a genuine watershed moment.

Modus – specifically, its subsidiary Modus Urban Regeneration – is working on a host of retail schemes around the UK, and as far afield as Romania.

Its two young directors – Tim Heatley, 27, and Anthony Kilbride, 34 – are among a new breed of developers bringing sustainable initiatives to mainstream retail development projects. As they explain, the idea is not a short-term fad aimed at creating good PR. It can have long-term benefits that add significantly to the company’s bottom line.

“One of the main drivers for us is that green property will become an investment class in its own right,” says Heatley. “In 20 years, we expect that a green development will sell more easily because of its green credentials and may attract a premium.”

MUR’s key aims include minimising the carbon footprint of all its developments, both during construction and through each scheme’s life cycle. It is committed to reducing energy consumption in its developments by 50%, compared with its rivals, and to use renewable energy sources where possible. A BREEAM “very good” rating is considered a minimum standard.

Kilbride admits that the company is still on a “learning curve” in terms of delivering its sustainability objectives. He says that the rationale behind creating sustainable schemes is obvious.

“We think there is an increasing awareness among consumers about personal carbon footprints, and consumers will begin to pick green schemes over others. Our retailer partners have their own green agendas, and landlords need to offer schemes that reflect that,” he says.

“If you deal with them early enough, sustainable measures don’t have to cost the earth,” Kilbride adds, acknowledging the pun.

Modus retains its developments among its growing stockpile of investments, reasoning that it is in its best interests to hold on to new schemes for between two and 20 years before selling them. This enables the company to try different sustainable measures.

“Because we keep hold of our schemes, we can continue to reduce the carbon footprint during the life of the scheme – for example, by creating incentives for retailers to recycle waste,” says Heatley. “We know that retailers have tight margins, so asking them to think about the environment as well can be a lot to ask. By partnering with them, we can take some of the pressure off.”

Heatley admits that the design of Wigan’s Grand Arcade, which predated the creation of MUR, did not tie in with the company’s green objectives.

Without delaying the build programme, the scheme had to be brought “back on track”.

Heatley says: “It’s experimental in many ways – we’re seeing how the green measures function.”

Grand Arcade opened in March this year. Kilbride says that its sustainable features range from photovoltaic tiles and a green roof with “natural habitat vegetation” to more mundane elements, such as energy-efficient light bulbs. Rather than using energy-hungry air-conditioning, the scheme is naturally ventilated – still a relative rarity in modern retail schemes.

Kilbride is adamant that a sustainable path, if followed from the beginning, does not necessarily create excessive trouble or expense for developers.

“There are many things, down to the orientation of the scheme towards the sun, that come for free if you consider them early enough. You need to keep testing yourself all the way through the development process,” he says.

Such an approach will be wheeled out in the company’s many other developments around the UK, including Friars Walk in Newport, Delamere Place in Crewe, and Hounds Hill in Blackpool. MUR aims to apply the same green strictures to its debut European scheme in the Romanian capital of Bucharest.

The 1.9m sq ft development, Bucharest Colosseum Centre, will be bigger than Bluewater in Kent and anchored by Carrefour. It has a £260m build cost. The site is being developed in partnership with Bolton-based private investor Panico Panayi, the owner of Cambos Leisure, which sold its Buckingham Bingo operation to venture capitalist Alchemy Partners for £90m in 2005.

Modus has been working on the concept for the scheme for the past two years and has planning approval. While acknowledging the various hurdles that must still be negotiated as part of the company’s first foreign development, Kilbride is confident that the scheme can be delivered.

“We shouldn’t be scared of the red tape, because it involves exactly the same processes as in the UK,” he says. “We just need to be more careful because the systems perhaps aren’t as refined and things take longer.”

Heatley says that the aim is to capitalise on growing demand from retailers for space in new EU states.

“We’re doing what retailers are doing,” he explains. “There’s more activity over there from retailers such as Debenhams and a few other UK faces.”

Sustainable features will be pursued, where possible, in Romania as in the UK.

“As a principle, it should be applied to Europe as well,” says Kilbride. “Bucharest is part of the EU and we need to future-proof the investment.”

From Wigan to Romania may seem like a long journey, but Modus seems confident it can stamp its sustainable vision on the whole of Europe.

Its approach to green shopping centres could pay dividends. Rival developers and investors will be watching closely to see if it does.

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Setting sights on europe

Manchester-based Modus Ventures is a holding company with four branches.

One is Modus Urban Regeneration, set up three years ago, and co-owned by Modus founder Brendan Flood plus Mike Riddell, Tim Heatley and Anthony Kilbride.

It undertakes town-centre developments in UK towns such as Wigan, Crewe and Blackpool, and is expanding into Europe.

Its current development pipeline is valued at £2.2bn and growing.

Other companies under the Modus umbrella include Modus Properties, which focuses on smaller out-of-town schemes anchored by food stores.

Modus also has an investment arm, which retains the company’s developments, as well as a private equity business.