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Published 14 October 2019
Sally Morris-Smith is a partner at international law firm DAC Beachcroft and a specialist in mixed-use developments. She considers how local authorities can get best value from their involvement in the high street and how partnerships with private operators can support their ambitions.
Last month, Drapers Record, a leading publication for the retail sector, reported that local authorities are poised to spend an additional £230m on acquiring shopping centres in the coming year. This adds to the £775m spent on other shopping centre purchases over the last three years.
This investment into previously privately-held centres has been driven by a variety of factors, the need to generate income and to redevelop town centres featuring high on the list. Certainly, this ownership gives councils greater self-determination but it is by any measure a challenging time for our retail centres. On average, one in twelve shops are currently empty.
Changing consumer behaviour, online shopping and rising costs are some of the causes of the structural change in the retail sector. Whether councils are owners or developers of retail centres, or simply an interested stakeholder, it is critical to review how customers are using the real estate and determine what needs to change.
Mixed use will increasingly redefine the future of the high street, with a healthy combination of retail, office, leisure, residential and health. In retrospect, it was just the latter part of the twentieth century and the early years of this century that saw the dominance of retail. We are now experiencing a shift from single use with add-ons, to the development of much more vibrant destinations that match what the particular community – small or large – needs.
The right combination will vary from location to location. Responses will be individual, not uniform, depending on a variety of dynamics - local land values, demographics and economy for example. New concepts, more independents, experiments with co-working and co-living are all playing a part in this more creative landscape.
Getting the balance right is a complex equation that requires any owner to play to their strengths and accept that they may need to draw on the skills of experts in other areas. More than ever, success will be based on a real understanding of the desired audience. Councils are well placed to understand the customer base for their town centres, with a passion to ensure the sustainable health of the local economy and that residents are well served. The investment is emotional as much as it is financial. However, just as private developers are coming to understand that a background in shopping centre development does not necessarily equip them with the skills to get the right type of residential provision, so councils will too be wise to bring in appropriate expertise, most likely from the private sector.
Any partnership is based on respect for what each party can bring and successful collaborative efforts are fuelled by this appreciation. Many promising starts have been undone by well-meaning ambiguity. Clarity around expectations, commitment, responsibility and deadlines is the critical foundation to any public/private alliance. Independent advisers and project managers have an important role to play in driving the deal and the project and keeping things objective. Decisions are best made with a clear purpose as a filter and for local councils this will be guided by what is best for the people who live, work and shop in the town.
While the mixed use nature of the high street is something of a return to the past, councils will be well advised to always keep the future at front of mind. Perhaps ironically, while the technology behind internet shopping has been partly responsible for the structural changes we are seeing, new technology such as mixed reality, the Internet of Things and Artificial Intelligence can be part of a successful programme of renewal. Analysis of volumes of data can be the key to personalisation, robots the answer to better information about what’s on offer and mixed reality the provider of the unique and theatrical experience that draws people in, giving them what they cannot get online. Our further views on technology as a solution can be found in PropTech: The Retail Environment.
Rachael Reynolds, Richard Marshall