Marriotts: 'Result will be good for Witney' (From Witney Gazette)

Marriotts: 'Result will be good for Witney'

8:27am Wednesday 6th February 2008 in Witney By Chris Koenig

WHEN the USA sneezes, the rest of the world catches a cold, they say, or something very like it.

But could a hiccup in funding the new £40m Marriotts Close, in Witney, be an early symptom of an economic slowdown very close to home indeed?

Giant American bank Morgan Stanley, now facing £2.9bn losses courtesy of the US credit crunch, has pulled out of an opportunity to support its UK joint venture partner, Kandahar, in funding the Witney development.

Funding for the Witney scheme, and another in Lichfield - the £95m Friarsgate scheme - were the first to lose out on the American money following the announcement of Morgan Stanley's losses.

In the past, Morgan Stanley has entered joint ventures with Kandahar to fund developments, notably at Drakes Circus, in Plymouth.

Now Kandahar, the investment branch of David Ross's Carphone Warehouse empire, has decided to pick up the whole bill itself - so the development of the 116,000 sq ft scheme, including 15 shops, a five-screen cinema, two restaurants, a 650-space multi-storey car park, and 138 flats - is still on track to open in September 2009.

Luke Pickering, managing director of Simons Developments, the company developing the site with Kandahar funding, said: "We didn't wobble when Morgan Stanley declined to invest.

"Obviously, things are getting harder, but I took the view that if one of the wealthiest men in property, David Ross, was prepared to invest in Witney, that was a vote of confidence in the town."

He added: "I've worked through three recessions, and so far, I would describe this as a slowdown, not a recession.

"If you have good tenants in place, as we have in Witney, and a top location, the money is still out there.

"If David Ross had decided not to fund this himself, I think I would have found backing elsewhere.

"What will be harder to fund in future will be speculative builds, in which no tenants are in place."

Marriotts Close has, on the contrary, some top names on its tenant list of pre-lets.

These include Marks & Spencer (taking the 32,000 sq ft main store), Debenhams, Monsoon, Cafe Rouge, and Starbucks.

It has already pre-let seven of its 15 retail units.

Mr Pickering admits (reluctantly) that times are becoming more difficult in the retail sector, but he maintains stoutly that they are not as bad as is widely reported.

He says the right tenants will still take space in the right locations, although he adds that, nationally, there is probably too much floor space coming on the market right now in the retail sector - which could mean too many developers chasing too few tenants.

But the question remains: If the chill wind blowing across the Atlantic means American money is becoming scarcer, how will that affect developments right here in Oxfordshire?

Morgan Stanley would not comment, except to say that it is still investing in some UK projects.

Ever upbeat, Mr Pickering, added: "The Witney financing was unusual in that it was directly affected by the joint venture arrangement with the American financier.

"Usually, funding comes from UK sources.

"In many ways, it will be good for the town of Witney that the development will have only one backer, Kandahar.

"It will be more personal - less in the hands of a faceless international organisation."

He said that Witney had everything going for it on the shopping front.

Mr Pickering added that many local people now prefer shopping in Witney to the alternative of Oxford, where difficult parking is seen as a turn-off.