COMMENT: As we approach the final quarter, it feels like time to stop and catch a momentary breath after the chaotic opening to 2018. Retail has been in the news every week, if not every day, with store closures, CVAs and administrations dominating headlines. But at Revo in Manchester earlier this month, the mood was positive, writes James Child, EG’s retail analyst.
Consolidation and upheaval in the retail sector cannot be ignored, but the necessary and frank reflection on what has been a tumultuous period was met with talk of opportunity and the readiness to change. The big news came with the organisation’s initiation of a change in classification of retail space. Primary and secondary terminology will be replaced by destination and lifestyle, community and specialised purpose.
The goal? To be able to specifically identify the real value of an asset by understanding its function within the community within which it sits.
Creating this greater foundation of understanding should, in theory, prompt a move away from the “primary good, secondary bad” concept, the negative connotations of which reduce a scheme to its economic output.
Not to be scoffed at
Having talked to multiple asset managers and scheme owners at Revo, it is clear that the appreciation of a service-led, community and convenience-based retail destination by consumers is not one to be scoffed at.
The big shiny mega malls, those “primary centres”, may get all the attention, but not all assets need VR headsets and giant gaming screens or experiential retail. People still need, moreso perhaps, the less shiny, service-led offers. Services such as dry cleaners, key cutters, nail bars; even the Post Office and local bank. I’m pretty sure you can’t get your haircut online, right?
That’s the sentiment that came across so strongly at Revo this year. Yes, retail spend online keeps rising, it has doubled in five years and sits at nearly £1 in every £5 spent in UK retail, but there will always be a need for physical stores and places.
It is the re-animation of existing places that is the real challenge for the future.
Many underperforming destinations that have fallen short in terms of investment from the traditional REITs have grabbed the attention and funding of local authorities, which have used the unusual market conditions post-referendum to make their move in a subdued market.
Council spending
According to Radius Data Exchange, councils have spent more than £4bn on commercial real estate since 2013. The ability for them to provide a localised and specific offer for the community they serve is an obvious positive, while de-fragmenting high street ownerships can make it easier to drive through regeneration in the long term.
The most refreshing message at Revo was the acceptance from several authorities that they will struggle to deliver successful change without the help of the private sector. Canterbury City Council’s appointment of NewRiver last week to manage Whitefriars Shopping Centre (pictured above; the authority purchased the scheme earlier this year) hopefully won’t be an anomaly.
Collaboration between both sectors is needed to enable investors to regenerate and repurpose retail space in town centres and high streets up and down the country. The repurposing of redundant retail stock away from A1 use is necessary to facilitate this.
The facts are clear. There is too much retail space. We just don’t need the same number of shops we used to. We need to embrace the idea of removing redundant retail stock from the equation all together and reanimate that space to supplement the existing offer with exceptional additions of homes, leisure and work space.
Re-gearing space
Successful re-gearing of that space into community uses, business space and particularly residential will work to create more vibrant destinations with higher footfall, and the propensity to safeguard the remaining stock for occupiers in the area.
Planning data from Radius Data Exchange shows that applications for change of use from A1 to C3 are up by 130% year-on-year, and permission granted on those could create an additional 12,700 new homes.
Identification of what different retail destinations have to offer is the first port of call in this industry’s bid to save the high street; securing the right type of investment will help to create an asset that is fit for purpose and fit to serve.
People are social creatures and we still like to shop, whether at specific or community destinations.
It really is all about the three r’s: reclassification, reanimation and repurposing.
To send feedback, e-mail james.child@egi.co.uk or tweet @JamesChildEG or @estatesgazette
