23 Apr 2010
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Tesco dusts off mixed-use schemes to expand output

Supermarket giant Tesco is planning a £1.6 bn store development programme, Building reported.

The programme, which is an expansion of 40 per cent on last year's development output, will see a number of schemes restarting that had been placed on hold, in particular major mixed-use developments.

Six mixed-use schemes are restarting. These include Love Lane in Woolwich, south-east London, which is now expected to start in May, Queen’s Square in West Bromwich, and the Streatham Ice Rink scheme, south London.

Tesco has spent the last year reworking the schemes so they can be phased over a longer period to take advantage of market changes. It is also thought to have reduced the residential element of a number of schemes. Part of its mixed-use development team was cut at the start of 2009 as the recession bit into expansion plans, causing it to review its plans for city centre regeneration schemes. But in recent weeks it has been presenting revised development plans to architects.

Tesco said: “Over a number of years we have developed a good pipeline of space opportunities. As a result we can unwind some of the work in progress we have built up and will be stepping up the rate of expansion in 2010/11.”

The statement came as Tesco reported a 10% rise in pre-tax profit to £3.2bn.

Building reported that the superstore is looking to bring in new contractors for the raft of projects.

A source close to the retailer’s supply chain said: “We’ve been told they definitely want a 25% increase [above the 2 million square foot annual average] in the floorspace delivered this year from previous years. And they’re talking about bringing in other contractors.”

The news comes amid a reshuffle of Tesco’s contractor framework, in which Kier and Taylor Woodrow (Vinci) have taken a lesser role. It is thought Essex-based McLaren is one of several firms in talks to join the framework, which already includes Barr, RG Carter and Bowmer & Kirkland.

However, the source warned that as Tesco was continuing to drive down prices, the increase in store space would not mean an equivalent raise in revenue for suppliers.