The changing High Street:
Threats facing Britain’s high streets present something of a challenge to those landlords owning retail premises where businesses are failing, with tenants leaving in droves, leaving huge holes where properties lie vacant.
A street with lots of run down and vacant premises means that property values and rent levels drop through the floor, leaving many landlords wishing they had never invested.
But what to do? One option is to think about changing the use of buildings. The out-of-town and edge of town retail park boom of 20 years ago, and the latest growing trends in online shopping are leaving many town centres desolate and ripe for re-development.
Many commercial landlords big and small are considering alternative uses for their buildings to attract more tenants and bring new life into the town centres, many hollowed-out doughnut style by retail and industrial sites on their peripheries.
In the recent past most high street moved to a retail only model which was very successful when everyone had to visit the town centre to buy what they needed, especially the occasional items like clothing, electrical good, toys and furniture: not any more. All those items can be purchased elsewhere and usually cheaper and more conveniently.
It has left the high street populated with coffee shops, estate agents and charity shops, more often than not servicing the needs of low income shoppers, while the affluent high earners go out of town and online.
So what should investor landlords be thinking of when faced with such a daunting problem. Reducing the number of retail units while bringing people into the town to live has the potential to revitalise many towns. Sensitive and controlled re-development and change-of-use means landlords should look to the future, see the bigger picture and work with town planners to achieve a common goal.
From small landlords of shops to those owning large department stores, House of Fraser, British Home Stores and Debenhams, being prime examples, are struggling to fill their vacant space. Sitting on this vacant space is very expensive for landlords, with business rates, high insurance costs, utilities standing charges and extra security to pay.
But all is not lost. Redevelopment to residential accommodation, student accommodation, hotels and leisure activity space is taking place in many location currently. Gradually the character of a town can be transformed, bringing people in to the sentry to live and work, just as it was in years gone by. Some locations ideally suit encouraging more tourism and leisure activities.
What retail activity is left will be more bespoke, coupled with more of an experience than a chore, added services to create an environment where the families can spend a day enjoying pleasure activities as well as browsing the shops. Changes like this will require planning and investment, not just from landlords but from retail tenants and local authorities.
Key anchor tenants need to be attracted to and kept in centres to draw in the crowds, tenants that can enhance their offer by supplying additional services. Landlords need to be flexible with leases, which inevitably will be much shorter than the traditional long-term insuring and repairing lease – it’s a tenant’s market so making the offer attractive to them is key.
Pop-up shops are a good starting point with little commitment from either party, but longer term, attracting other activity based tenants such as art galleries, community centres, cinemas, games venues, casinos, ten-pin bowling, ice skating and skateboarding is vital, the list of possibilities is endless.
Many buildings do not easily lend themselves to conversion and will represent a challenge to any developer. But with imagination, sympathy to the existing character of the town, and co-operation from the local authority, means that meeting the planning requirements, change of use regulations, building regulations and in some cases conservation and environmental issues, can all be overcome.
The is always a certain amount of satisfaction in taking an existing building, coming up with a design that meets all of the above, and achieving a result through re-purposing that meets the needs of new tenants, and tuns around what is otherwise a lost cause.
Large buildings may be dividend into several smaller units, and providing the demand for the new space is there, the building may even achieve a higher overall rental return than before. Creating mixed use space with retail, residential, office and leisure occupation, not only is more attractive to new tenants, it reduces the landlord’s risk
Its help that temporary flexible uses and permitted development rights for developments sympathetic to the overall character of the town have given landlords the flexibility to make these changes.
Change of use for struggling retail space has the potential to revitalise town centres. It will change the character of the town but this can be done sympathetically in conjunctions with the authorities who should welcome it.