Sainsbury’s announcement this month that it will be cutting the amount of new shop space it opens by a third, to 500,000 sq ft in each of the next two years, is the latest blow to the new supermarket space pipeline.
That’s not to say that the Big Four of Tesco, Sainsbury’s, Asda and Morrisons aren’t continuing to grow in different ways. But, having been the anchors of town centre development for so long, it is now clear that they will no longer drive UK regeneration.
Flats above shops, the other great driver of regional regeneration, is also now a more difficult proposition following failures during the 2008-2009 crash.
But what is also clear is that growth is spreading beyond London, and it is important to capitalise on this wave of enthusiasm.
Cities minister Greg Clark and the government’s regeneration guru Lord Heseltine have pinned their colours to their £3.2bn Regional Growth Fund, and many investors are seeking value beyond the capital.
My view is that town centre leisure is the answer to many regional centres’ development and regeneration conundrums.
At Urban & Civic we are already pursuing projects in Darlington and Burnley with a significant leisure element, and here’s why: Kensington & Chelsea – where the average home costs 32 times more than the average wage – is the least affordable place to live in the UK. By contrast, in Oldham and Rotherham, the average home costs five times the average salary.
People in towns like these have more disposable income to spend on a trip to Odeon or Cineworld, in Nando’s or Prezzo. If both adults in a household are in employment, that disposable income rises further still.
The best mix is a cinema as anchor, accompanied by a themed pub and another themed restaurant – serving either pizza, pasta or burgers.
Crucially, this mix strengthens a town centre’s night-time economy, has a genuine family appeal and can have a beneficial effect on late-night shopping. With so many town centres having a surplus of retail, leisure can provide a far better balance than just adding more shops.
There is also strong institutional demand to fund town centre leisure, with outlets having the covenant strength provided by their large parents and the added appeal of often requesting 15-year unbroken leases.
Winning local authorities over is not always easy. They have become reliant on traditional models, such as supermarkets and residential above shops, but at Urban & Civic’s Terrace Hill subsidiary we are increasingly finding that they understand the case.
The other alternative uses we believe in strongly are student accommodation and hotels: student accommodation fuels demand for leisure and retail outlets; and there is an historic shortage of hotel space in most UK town centres.
I don’t believe for a minute that food store development is dead, but until the Big Four come to terms with their current problems it will be vital for the public and private sectors to think laterally in ensuring that regional towns are revived.
Philip Leech is property director at Urban & Civic
