Meeting the challenge of a declining retail sector…

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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.

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