Corporate News

Out-of-town retail called on to allay town centre decline

High street asset manager demands help for town centres from out-of-town schemes that exacerbate decline.

Out-of-town retail developments that have an adverse impact on nearby town centres should contribute to their regeneration, an in-town retail asset manager told the Accessible Retail Debate last week.

Mark Williams, a partner at Hark Group and chairman of the distressed town centre property taskforce, was speaking at the debate at the Royal Institution of Great Britain in London. He told more than 200 property professionals in attendance that there should be a tax on out-of-town developments to help pay to convert the retail space in town centres rendered surplus as a result.

We need stronger local authority leadership looking at what they want from their towns and using CPO powers to bring that about.

The private sector is fully supportive but it cannot do it alone. It cannot be done piecemeal, as multiple ownership does not allow it. Wholesale change to bring about large acres for housing, parking and public space is what is needed.

hark1Mark Williams, partner at Hark Group and chairman of the distressed town centre property taskforce

Williams warned: “Town centres look pretty cooked,” adding that there is a need to “decommission retail floorspace” to make way for other uses and return town centre vibrancy, but finance is needed to do this.

“Any study that suggests there’s more capacity for retail floorspace is flawed,” said Williams. “So, if we are adding more space, it’s going to have an impact somewhere else. It doesn’t mean it’s wrong — we just need a plan
in place to bring about that change.

Customers are moving away from out-of-town retail and are moving back to smaller-format town centre stores. The new business model is not out of town: the new business model is vibrant town centres

hark2James Lowman, chief executive of Association of Convenience Stores

“If you are going to create significant land value — so the land value shoots up as a result of the consent — then potentially there should be a tax on that to deal with the reduction in floorspace in the town centre to make it smaller and more vibrant.”

But Andrew Jones, chief executive of LondonMetric Property, countered that developers already contribute through section 106 payments to local authorities in exchange for planning consent.

“We have been doing that for years with section 106s,” he argued. “We recently built a new retail park in the north-east and the section 106 went to help the town centre managers. “I would rather we didn’t have to do it but, if that’s the price of being able to play, then that’s the price of entry.”

The demand-supply dynamics will continue to worsen. Vacancy rates will continue to rise both in town and out of town, with obsolescence becoming a key issue. We have seen significant under-demolition in vast parts of the UK retail space. Many high streets will get shorter or disappear and we will need to focus on the real destinations

hark3Andrew Jones, chief executive of LondonMetric

James Lowman, chief executive of the Association of Convenience Stores, urged the government to do more to makes sure local authorities had local plans to help control development.

They lack strategy as they are “trying to tackle applications as they come up, rather than working to develop a local plan that works for the long term”.

“I’m not opposed to decommissioning space in town centres, but it needs to be done in a careful planned way,” he said. “We need to manage the decline.”

The government should also be aiming to take more control over larger out-of-town applications that will impact across multiple local authority boundaries, Williams added.

The answer for town centres is to try to identify what they can do best.

That will enable [high streets] to be the centres of their communities. Civic uses need to come back into town centres to boost footfall and make it more attractive for some retailers … We have to also make parking more attractive

hark4Will McKee, chief executive of Accessible Retail

“With only one local authority making a decision on that application, it puts democracy in question,” he warned. “There needs to be full transparency about what the impact will be.”

Mark Bowles, head of estates at Boots, which has 3,100 stores in and out of town, called for the government to support effective town centre management. He demanded “a larger vision, which is consistent and coherent, supported by political narrative” and to reduce operating costs to make high streets more competitive. He also stressed the need for a cut in business rates and parking charges.

Jones declared that rents need to fall in town. This will happen, he said, as Jones Lang LaSalle research indicates 51% of town centre leases will expire over the next three and a half years.

“In the vast majority of cases, rents have got to fall, and when they fall, we will start to get demand-and-supply equilibrium. We have got to right-rent the space.

“If that means that individual equity is destroyed, so be it. If it means the banks have to take a write down, then that needs to happen. Nothing goes on forever.”

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