The UK high street had a raft of problems before the COVID-19 outbreak ever appeared - from rising business rates to customers moving online and a sluggish economy. The lockdown measures imposed to halt the spread of the virus have since proved the tipping point for a number of retailers, pushing them quickly into bankruptcy.
While there are Government support measures designed to help those still in business, it is hard to paint a bright future for UK high streets even as lockdowns are eased and consumers begin to return to more normal spending patterns.
To our mind, planners and landlords need to be more creative in their approach, reimagining these shared spaces to meet the next generation of living, working and shopping needs. It may be that by adjusting the mix, a different kind of high street could eventually emerge but it is going to require a change to the way we operate to help it thrive.
The decline in the traditional high street has been happening in front of our eyes for some time. First, there was the move to ‘big box’ retail and large floor-plate offices on the outskirts of major towns and cities. This drew people away from town centres to work and shop in utilitarian developments with convenient parking that met all of their needs in one place and often under one roof. Next came the competitive threat from online shopping, which squeezed margins in an already competitive industry.
More recently, there has been pressure from rising business rates, from changing consumer patterns that see people buying ‘experiences’ over goods and now from COVID-19, which has kept people confined to their homes buying only essentials.
Beyond these issues facing the whole retail sector, high streets face another challenge: fragmented ownership. The best real estate assets are often those that fit into a wider vision for an area but uniting takes upfront investment and a commitment to a long-term vision. This is next to impossible when there is a range of owners with different aims and incentives. It would be unreasonable to expect an individual landlord to accept the costs of a longer vacancy period or a worse tenant covenant just to find the right ‘fit’ for a high street as a whole.
The solutions do exist
The solutions are already happening. One of the best examples is to be found on London’s Carnaby Street. The Landlord, Shaftesbury, has substantially redeveloped this Soho hotspot, adapting the offering to meet ever-changing consumer demands. They have shown a good eye for design and a keen understanding of urban planning.
While this takes time and deep pockets – Shaftesbury bought one building at a time and started 30 years ago – it also takes cooperation from the local authorities. Westminster Council showed itself to be relatively enlightened about changes of use and redevelopment of the public realm.
Without common ownership, it is vital to have more detailed and coordinated planning but the politicization of the planning process makes it almost impossible to have an area-wide, long-term, holistic plan. The result has been ill-considered development that has done little to draw people back to the high streets and it is only joined-up thinking and thoughtful planning that will ultimately save them. We believe that councils, developers and landlords must come together to design a space that can continually adapt to how people want to live, work and shop
Can councils be more involved?
It could be argued that Carnaby Street is an exceptional space and spots where people want to live, work and shop are rare. Certainly, London has led the way with so-called campus developments that mix the three elements of working, residential and leisure successfully.
However, we would argue strongly against those who suggest it isn’t possible elsewhere in the UK. It is possible if councils and landlords show ambition. Councils’ investment in real estate need not be the controversy it is swiftly becoming.
If they bought within their own council areas, they would be better aligned with more stakeholders. They could ensure the right mix of social and ‘build to rent’ residential for a new generation of renters who neither want a long commute nor have the prospect of being able to save for a significant deposit. Perhaps more importantly, they could also improve facilities for the provision of healthcare, education and community services. And they could do all of this while simultaneously maintaining a direct financial interest in the commercial success of the whole area without being constrained by some pre-determined investment return hurdle.
This requires a level of expertise that not many councils yet have access to. While that is developed, intelligent planning is an important place to start. We could create ‘high streets’ that provide people with a reason to linger and fix one of the key problems with the current iteration: namely, that they are not often a nice place to be. If offices, residential property and community spaces are put back thoughtfully, it can become a shared experience once again.
At the other end
There are plenty of examples of this being done badly. Too often, we’ve seen developers simply build a straightforward tower and add a bit of retail space at the bottom, almost as an afterthought. To be successful, developers and planners need to work together to create a well-planned space that works for each link in the chain. Undoubtedly, it is harder and it isn’t just councils that need to be more skilled. Developers need to have expertise in more sub-sectors and understand how they fit together. They also need urban planning knowledge and a strong enough balance sheet to commit to making it work.
Nevertheless, we are seeing examples of multi-faceted, mixed-use developments that incorporate retail, residential and office buildings and provide a focal point for the people that inhabit them. The next generation of high streets will not look the same but they can yet be fit for purpose as the centre of our future communities.
By necessity, this briefing can only provide a short overview and it is essential to seek professional advice before applying the contents of this article. This briefing does not constitute advice nor a recommendation relating to the acquisition or disposal of investments. No responsibility can be taken for any loss arising from action taken or refrained from on the basis of this publication. Details correct at time of writing.
This article was previously published on Smith & Williamson prior to the launch of Evelyn Partners.