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Expert opinions, profiles, market trends, debate and the latest news in an ever-changing sector

Creative Tuesday 9th December 2014

The high street ain't dead!

The high street ain't dead!

At the extremes, there are still the ‘mega-prime’ High Streets that continue to be strong, and attract a wide spectrum of shoppers and the best retailers. Their continuing challenge is to stay fresh, attractive and to move with the times while providing the right space for new occupiers. At the other end of the spectrum, there are centres that are so badly neglected and their reputations so tarnished that they would struggle to ever change that perception without starting from scratch.

However, that challenge is being accepted and towns and their High Streets are now reinventing themselves. Through the recession these changes were largely instigated by local authorities who were keen to see their towns maintain status, provide services for their constituents and, of course, maintain business rate income. Now that the economic recovery is taking hold, developers and investors are coming to the party: purchasing properties and development sites in order to make a return from the improving confidence in the sector.

So how are our towns repositioning themselves? Much has been reported about the role of leisure in helping turn around the fortunes of towns and centres and it is true that it has played a large part. The cinema, hotel and food & beverage market continues to advance, helping create new, integrated developments and attractive retail destinations.

Smaller towns are also tuning in to what a largely commuter-based population wants: convenience and impulse retailing, health services and somewhere to eat, drink, visit the cinema or go to the gym. And boutique is a new watchword, from artisan food to high-end fashion or bespoke interiors. One of my favourite new trends is the boom in cycle shops such as Maison du Velo or Look Mum No Hands.

Above all, retailers have identified the need to be smarter and more flexible. What is your core market, when are they about and what do they want? I am still amazed when I visit small towns on the weekend and nothing is open on the High Street on a Sunday. Conversely, in other South Eastern towns I am seeing retailers going back to the old model of closing either one week day or closing early and then opening on the weekend and/or opening late one or two nights.

In the past four to five years, new development has revolved around leisure and supermarkets. We are now seeing a halt to large-scale supermarket expansion (stores of 50,000 sq ft plus), but there is a continued push in the Sunday trading/convenience end and a concerted push by the ‘discounters’. Tesco for instance has just announced it is to close 43 stores nationwide, surrendering market share and opening new opportunities where it withdraws its High Street convenience type branches. At the same time, we are now seeing other traditional retailers back on the acquisition trail with fashion brands such as H&M, Next, TK Maxx, Sports Direct, Gap, River Island and New Look either looking at smaller, mass market towns or relocating to larger units in existing towns.

At the smaller boutique end of the spectrum we are continuing to see aspirant boutiques such as Mint Velvet, Pure, Crew, Jojo Maman Bébé, Cath Kidston, Muji, India Jane and Joules expanding. Boutique cosmetics such as Mac, Benefit, Space NK and Jo Malone and chocolatiers such as Hotel Chocolat, Monty Bo Jangles and Montezuma’s are also populating our towns, while outdoor wear Cotswold, Snow & Rock, Mountain Warehouse and Trespass and the cycling retailers such as Evans, Cycle Surgery, Cycle Republic (Halfords) and Rapha are enjoying continued success.

Retailers are more cautious and the success of lettings is now more reliant than ever on the right space, with the right adjacencies and a well scrutinised financial deal, but there is now a good selection of operators to talk to once again.

In ailing/ageing smaller shopping areas, one option for revitalisation is to create larger space through assiduous asset management and pulling in a retailer of the calibre of H&M or Next. The retailers secure rare large units in a new catchment and the landlord, despite having to agree very favourable financial terms to the tenant, creates a new draw to the centre, bringing in new footfall and a wider demographic.

And with changing shopping habits, these stores and centres are using online and mobile shopping to their advantage. The amount of click-and-collect business is growing rapidly and by bringing the shoppers in to collect or return, you create linked-trips and other retail business. A raft of new click-and-collect options linked to transport hubs across the greater London area is testament to this.

Franchising is flavour of the month with the coffee and restaurant markets leading the way. Costa, Starbucks, Muffin Break and Coffee Republic are all now franchised and expanding.

Until now, most High Street development has been led by the public sector which is seeking to regenerate towns and whilst still seeking to either procure a capital receipt of improvement in the public sector income. They have been offering developers and investors a softer entry into the market with returns being shared at the completion of the development. What we are now starting to see is a return to the traditional purchase of site up-front model, particularly in residentially-led developments. Some local authorities are creating long-term income by seeking to take advantage of their very competitive public sector borrowing rates to fund their own developments.

In the development field there is a continued rebasing of values and some developments that were sold or allocated by local authorities are now coming back to the market to start again, because either plans or values were too ambitious at the time. While mixed-use is the fashionable answer to development, developers and their advisors still need to be cognisant of the market. You can only afford complexity and massing when you are developing in a major settlement where values will support the increased build cost and end service charges. In smaller towns it pays to keep it simple.

A good example of the new players in the sector is CoPlan Estates: a boutique mixed-use developer formed in 2006 by former St Modwen directors.

CoPlan see a large number of towns that are short on leisure and decent catering facilities as well as affordable housing, hotels and cinemas, which means there is plenty of scope to find sites and make a return. Food stores are another sector they know well and these can also form part of either High Street or District Centre development.

CoPlan’s Colin McQueston comments: “We have dealt with the major four supermarket operators, but more recently have developed and let stores to Aldi, whose model is more compact and fits in to smaller town centre sites. Also they have been happy to go and compete with other operators without getting into the complexities of parity of offer”.

It is an asset class they know well and understand, they like the challenges and interest a mixed-use scheme brings. They are most familiar with town centre schemes and have an expertise in engaging with and working in conjunction with local authorities, the town mayor and other major stakeholders. They are committed to the public consultation which is required by these projects. While the initial costs of entry and risks might be lower, the process required is more protracted and developing in town centres tends to attract more scrutiny.

Having developed schemes in Edmonton and Bedford, they are shortly about to commence works for a major riverside, mixed-use scheme in Bedford, which is 90% pre-let and will transform Bedford’s town-centre leisure and catering offer, also helping to connect both sides of the town and bringing the river to the town. Leasing is about to commence in a similar scheme in Redhill, Surrey. The Redhill scheme will incorporate more retail space too. It seems that the great retail wheel may well be turning back towards traditional High Streets and the values of place-making and destination shopping. Watch this space.