The American author and political activist Helen Keller put it quite simply: “Alone we can do so little; together we can do so much.”
One of the most pressing and well-publicised challenges facing UK town centres and high streets is the oversupply of retail space. Today’s retailers face a heady mix of challenges, namely increasing cost pressures, investment into supply chain infrastructure and a weaker pound.
Unsurprisingly, many retailers are reviewing their physical and online footprint to attempt to streamline estates and operations. From a retail real estate perspective, this equates to a simple case of too much supply and not enough demand.
A new lease of life
The excess of retail space in town centres and on our high streets needs to be reduced and re-purposed into important community uses that are conducive to the needs of an evolving demographic, such as residential, healthcare, civic services, co-working space, or greater leisure and entertainment.
According to data from CACI, in less than 30 years, 25% of the UK population will be over the age of 65, and an ever-ageing population brings with it greater pressures on healthcare and accessibility. Respectfully, it is important that town centres are regenerated accordingly to ensure they are fit for purpose for the future, for all ages and demographics.
However, with the large footprints of many town centres under the ownership of often unwilling or disparate owners, this task will be challenging. If left to the private sector alone, this process will take too long and may prevent ambitious and forward-thinking local authorities from delivering their objectives.
At NewRiver we have undertaken an extensive strategic review of the appropriate uses necessary for the long-term success of the town centres we are invested in.
And in most cases, this has been undertaken in consultation with the many local authorities that we work with, a total of over 60 different UK councils, who in our view hold the key to the long-term future of their town centres. We know that for our assets to be successful, they must be part of a successful town centre, and the route to this is public-private partnership.
Community hubs
The excess retail space, coupled with reduced demand, has led to increased vacancy rates and declining rental values. In turn this has created a lack of confidence toward the retail sector, leading to a lack of investment and a slump in capital values.
This decline in property values presents an exciting window of buying opportunities for local authorities to take control of an integral footprint in their town centre, and positively influence its long-term function for the benefit of the whole community.
At NewRiver, we believe that local authorities are the ultimate custodians of their town centres, uniquely and naturally placed to take the leadership role in addressing this issue of excess retail space by reducing and re-purposing it.
They are well positioned to take advantage of the low cost purchase of local property assets and benefit from attractive financial returns, creating important revenue streams to recycle back into their communities.
Local authority investment in retail property brings multiple benefits, and with a robust business plan it sends a powerful message about its future economic prospects.
However, managing a large retail asset does require specialist expertise, and in the current climate local authorities lack the necessary resource to effectively manage the assets.
This is why NewRiver has opened up its asset management platform to third parties wishing to own retail assets, but pass the burden of the asset management to a company with the necessary expertise, scale and governance.
This month marks the one-year anniversary of our appointment by Canterbury City Council to manage Whitefriars Shopping Centre on its behalf, as well as being appointed by Market Harborough District Council to manage a cluster of shops earlier this year.
This is a neat, full-circle partnership of public and private, and demonstration of Helen Keller’s mantra.
Critical investment
People will always need their town centres – an important community hub that needs to offer a diverse mix of uses, experiences and services, to encourage multi-purpose visits and cater for the daily needs of those living and working there. At a time when town centre investment is critical, meaningful change will only come through public and private partnership.
If we can break down the barriers facing town centres and reduce the timescales, then visible progress can be achieved. Applying vision and specialist expertise, through public and private partnership, will help re-purpose the excess retail space to meet the specific needs of future communities.
Allan Lockhart is chief executive at NewRiver REIT
