Is there a future for hospital retail malls and PPPs?

Shadbolt & Co has got together with BHE Developments to explore a new PPP phenomenon after reaching financial close on a project in Leeds.

Commercial law firm Shadbolt and developers BHE have produced a case study analysing the opportunities in building retail malls using PPP. They said: “Whilst many acute Trusts may envy the revenue generated by retail malls in purpose-built hospitals, the up-front capital cost, disruption to operational services and uncertainty of interest or take-up by retail tenants may appear too challenging to progress such a development in an existing hospital building. But that need not be the case.”

Using St James’ university hospital in Leeds as an example, the case study highlights the particular features of a retail mall PPP. The contractor will design, build and service the retail mall facilities without financial input from the Trust instead funding the PPP through the mall’s revenues.

According to Andrew Walsh, partner at Shadbolt and Tony Bromovsky, project director of BHE Development, the Trust collects rent for a minimum of 25-years, the project length. Walsh and Bromovsky say the mall can be successfully delivered by factoring footfall, location, and anchor tenants.

Shadbolt advised on the contract won by BHE and Assure to build St James’ hospital retail mall. The mall has a capital value of £6m and will be located inside the hospital’s main entrance. It is standard to have retail malls as part of new-build hospitals but this is one of the first retail malls to be procured separately using PPP.

The two firms are also in the planning stages of a “sensitive” project for the building of a retail mall in west London.