It is one of the most significant questions for retailers, landlords and local authorities: how can the declining high street be saved? Numerous reports have been written – Portas and Grimsy to name a couple – and plans of action drawn up, but to no avail. The issue was once again debated at a discussion held last month by law firm Mishcon de Reya. The panel, chaired by the Evening Standard’s Peter Bill, included Brandon Lewis, minister for local government, fire and rescue and high streets, Andrew Murphy, retail director, John Lewis, and Gary Yardley, investment director, Capital & Counties, and attracted some of the industry’s most prominent players, who came to hear the various views and question the panel. Noella Pio Kivlehan listened in.
Andrew Murphy, retail director, John Lewis: The biggest challenges facing high street retailers today mainly concern the impact of online trading and the fact that these traditional retailers have to figure out how to compete against that, either by differentiating really well or by joining in and investing huge amounts of money into IT that would previously be going to store experience and shops.
Retailers need help from national government, local government and landlords and there needs to be collaboration between all those parties to ensure the high street can compete effectively with out-of-town retail and against the internet.
Retailers like Amazon will suck up the revenue wherever it comes and you won’t see it coming. That’s not a comment on the tax avoidance, it’s simply a comment on the facts: distribution and IT will never make up for the jobs that you lose in front-end retail traditional services.
Gary Yardley, investment director, Capital & Counties: High streets can only survive and work if they are places people want to come to. When we acquired the Covent Garden Estate the area was challenged, to say the least, and most people thought we were pretty crazy to pay the price we did. But we believed we could change the whole emphasis, the whole speed of the place by getting the right mix and right quality of retailer for attracting the right kind of person to the destination.
It has taken us five to six years to do what we have done and we have had to challenge all the traditional issues about retailing and landlord and tenant relationships. We don’t like long leases, we like short leases. We buy tenants out if we have to from the older leases we had before; we pay ridiculous premiums.
It’s well documented some of the things we’ve done, but every one of those has created a lot of value for us where we replaced them with the types of retailers that people want to be involved with.
Turning to [our other scheme] Earls Court. It is the size of Mayfair and through it we are creating] a new high street… We definitely feel the location we are in will need some very high quality retail and that will be a range of retailers right the way through to retailers where basically we don’t charge any rent at all: if they make a certain profit margin we take part of that. We accept the fact that many of them probably won’t and therefore they will just be a cost to us, but that’s OK. The point is, if you haven’t got full ownership of an area you can’t take ?that risk.
Brandon Lewis, minister for local government, fire and rescue and high streets: The high street is changing, you have to understand that and let it move and not keep insisting that the whole high street has got to be about retail.
From the government point of view, I am quite anti us going in and telling places “this is how you will do it, this is the formula that works”.
The frustration I’ve got is that sometimes you need to jump on something that hasn’t worked. And actually what hasn’t worked is as important to me as what has worked. I appreciate business rates are a big issue… that’s why we are having a review of how it’s mixed and we are looking at quite a lot of things within that. But business rates are £26bn a year – that’s a fairly big chunk of the Exchequer’s plans for clearing its debts, so there is not a lot of room for manoeuvre, it’s how that system works.
What I am really quite concerned about is making sure we do understand that different areas will have different needs, different drives, particularly driven by their consumers. We are looking at a change potentially around the use classes, but we are not just going to have one completely free use class… we need to look at how we make it more flexible.
Tony Travers, director, London School of Economics: As very much an outsider to this debate, I have learned a great deal. But if your average councillor, council leader or planner were listening to all this very erudite talk and trying to think “what can we do about this particular high street, or this particular small town centre?” it would be bewildering.
The simplifying way I can see you can get around this is by taking an area, compulsorily purchasing the whole of it, selling it on to one developer, and then see what happens as an experiment.
But politicians in Britain, particularly Conservatives, have always been terribly averse to the idea of using CPO powers of any scale, because it seems such a terribly statist and interventionist and anti-British thing to do. In fact, the whole of the planning system is like that with status, which is another matter entirely. But it is used by people of all parties in order to protect what they currently have.
All I am saying is that, as a simplifying device, unless you can find a way of doing what I have just described, it is hard to see how the complexity of what needs to be done can be achieved, given all the things that are going on.
Mark Selby, co-founder, Wahaca: We have 12 restaurants around London and getting innovative companies in and saying,”OK, we understand leisure,” is important. We have been looking at Kensington High Street for a long time; you’ve got landlords who have been sitting there on properties where retail is going dead, but the landlord is sitting on this ridiculously high rent from 10-15 years ago and is just not accepting the fact that they’ve got to bring it down.
Nigel Fisher, property manager, White Stuff: It’s hard to find the right locations for our sort of offer. We are not keen on shopping centres and single landlords. They tend to be too prescriptive about branding, especially external branding. They have large service charges which don’t reflect what we do. We have our own network, which brings in our own marketing side of things, so we like high streets with diversity, and I think it’s diversity that is a problem.
Strong high streets remain strong. Secondary areas are falling apart, which tend to be the sort of places that we can afford, and they are filling up with charity shops, betting shops, and other, what I would call more parasitic retailers, in the sense they’re not really contributing to the life. They’re picking off the life there.
Toby Baines, chairman, Citygrove: Sitting here, listening to this, I have definitely seen the light. I built 12 cinemas in the UK in a year. The first one was so far out of town, in Watford, and what you realise now is the leisure and the restaurant offer need to be part of the heartbeat of the town centre. But it’s not just the use classes. It’s the speed of the planning. The decision making, in a local authority, the joined up thinking that then brings the licensing in that process, and the delivery process.
Brandon Lewis: What we are looking at with use classes is that you wouldn’t need planning permission, you’d just be able to do it.
Liz Peace, chief executive, British Property Federation: We have been looking at a sort of splinter group from Brandon’s Future High Street Forum on how you can create the same conditions as single ownership if you haven’t got single ownership. So, can you get some sort of voluntary undertaking from a group of landlords that they would put their properties into a collective vehicle, which you will then asset manage as a whole. Prices would go up, hopefully, eventually.
Peter Bill: What about commonhold?
Liz Peace I don’t see how you could use it. But what we want to try to do is take two or three pilot areas where you could draw a line of who actually owns the real estate in that area and look at how willing they would be to enter into some sort of joint vehicle. And look at a degree of compulsion – just the threat… would be quite helpful. But it would be better if you could do it by dangling the carrot of better values, better footfall, better place. All the things that would ultimately lead to their piece of real estate, in the long term, being worth more, and looking at whether you might be able to curate that as a well-managed piece of high street.
Gary Yardley: Using CPOs was the only way Covent Garden was going to change. It would never have changed otherwise. If you look around the country now at the rest of the public sector land, especially housing stock, if you want to rebuild those estates, and you want to create density in places, places where people can live, the only way it will happen is by state intervention making out at a local authority level… otherwise these places are just not going to happen.
Debbie Jackson, assistant director regeneration, GLA: I have worked with the mayor of London and we put an awful lot of effort into London’s high streets… people actually do want to love their local high streets. You just have to find reasons for them to love them again. So I’m obsessed with curation. There are some tremendous examples of that, but it’s where people own the property, and it’s not just the big Westfields of this world. Look at Brixton Village and what happened there – absolutely turned around the fortunes of that part of Brixton. So, what can we do that looks like that in a place where there is multiple ownership?
Brandon Lewis: What I am really quite concerned about is making sure we do understand that different areas will have different needs, different drives, particularly driven by their consumers. A high street is going to be driven by a consumer.
