Let’s go back to the beginning. In the post-war years, Britain’s bombed-out town and city centres were redeveloped by property companies.
They were benefiting from the grant of long leases by councils at peppercorn rents, creating a mix of chain and independent shops, small businesses, light industrial units, pubs, doctors’ surgeries, homes above ground-floor level and even schools.
Think Liverpool, Coventry, Plymouth, Canterbury.
Then in the 1970s the British town centre was revolutionised. All the fallow land behind those high streets was filled by new covered shopping centres (commonly referred to as Arndale Centres), very often with Marks & Spencer providing an important frontage and reached by an arcade stretching back to units mainly filled by chains.
“In 2008 the music stopped. Because at what point do people say ‘I’ve got enough stuff’ in an era of low wage growth?”
Think Lewisham in southeast London, Crawley or Ilford.
This format, supplemented by the 1980s and 1990s arrival of regional centres such as Gateshead’s Metro Centre, Meadowhall, Merry Hill, Cribbs Causeway and Bluewater, supported the UK’s seemingly unstoppable retail giants through a long consumer spending boom.
In the 2000s the race heated up further, with all the biggest developers competing for plans promoted by Britain’s top 30 or 40 towns for retail-led regeneration predicated on retailers forecasting 4% to 5% compound annual growth.
Think Birmingham, Leeds, Bristol.
Ups and downs
Then in 2008 the music stopped. Because at what point do people say ‘I’ve got enough stuff’ in an era of low wage growth and with travel and experiences offering a new alternative to shopping in a time-poor world?
At the same time, and particularly in London, travel has changed out of all recognition: there is almost nowhere you cannot reach more quickly by public transport than by car, and Millennials simply don’t need a driver’s licence to get around.
This is not to say the news is all bad. It has always been true that for every retailer failing there is another innovative new brand succeeding, and in fact retail sales growth was 4.7% in the third quarter, which was an acceleration on quarter two.
“When I talk to people about the future of town and city centres, Barcelona is raised again and again”
So, what do we need to do to repurpose our town centres for a year of steady but not spectacular retail sales growth?
We can start by looking at the best developments at home and abroad. When I talk to people about the future of town and city centres, Barcelona is raised again and again: it is a shopping, office, education and sporting hub and all those uses sit easily alongside each other.
Here in the UK, Argent at King’s Cross has shown the way forward with a more diverse range of uses, creating an institutional-grade asset with the University of the Arts at its heart.
We are entering an era of unprecedented change in terms of technology, socio-economics, demographics and an ageing population, which are creating new and diverse pressures on the high street as never before.
My forecasts for retail
First, retail park occupiers and their customers will head back in to town centres. Particularly in London this will be an unstoppable migration because of constraints on car use.
Second, we will see the growth of healthcare in town centres, with the NHS and BUPA currently on the hunt for medical centres of up to 30,000 square feet.
Third, we will also see other uses brought into shopping centres, on upper levels in particular. If a three-floor department store is vacated, its ground floor could be converted to a different retail use, its middle floor could become a gym and its top floor could become co-working space.
“Widespread demolition isn’t required. But heavy repurposing is”
Fourth, residential of different uses will be built above shopping centres, ranging from senior living to apart-hotels to student accommodation to hostels for young travellers.
Fifth, there is huge pressure on towns in commuter belts to increase densification through initiatives such as Permitted Development Rights, adding to the footfall needed to keep town centres alive.
Depending on how you approach the conundrum, these are challenging or exciting times for retail property. But don’t forget that these assets are in prime locations in the heart of towns.
Widespread demolition isn’t required. But heavy repurposing is, to move on from the retail development boom of the past 40 years.