I shared your post with a friend who is a Landlord, and he makes some good points below:
"The big issue is Business Rates. You can “place manage” all you like, but if the property overhead is too high, nothing will work.
There needs to be a recalibration of overall outgoings before the high street can regenerate – Landlords are trying to reduce rents as far as they can, but this is largely pointless as Business Rates remain fixed at pre recalibration levels. What other taxes do you know of where an asset is taxed at 50% of its annual value (and in the case of High Streets, the old value before rents fell).
In many cases Landlords are clinging on and accepting falls in rents but this is only half the story. Landlords with borrowings of more than 50% are stuffed. In many cases, business rates are now higher than the new recalibrated rent – and there’s nothing that can be done about that – that leaves Landlords hands tied in trying to provide a viable overall overhead for the retailer. I know of some landlords who have let their properties go for nothing just to avoid the empty [property rates – effectively their freehold values are now nil.
I am now letting my shops in my local town for lower than the tenants are paying to the council in business rates (previous rents £20k+, new rent £8-9K. Business rates remain at around £14K. That is just wrong, and it is that that is killing the re-birth of the high street – not fanciful thinking about “place management”..
The 3 steps to high street heaven in this article totally irrelevant until the gov fixes high street business rates – until then the High Street is fundamentally broken…
Will, thanks for this and for gathering the often-missing landlord perspective. I'm entirely on board with the observation that business rates are a problem - in addition to the cack-handed way they are assessed and charged, they are also fundamentally a cost you bear whether you are successful or not, and as such are the enemy of investment.
I think the only place where I'd divert from your landlord friend's forthright views would be the assertion that everything else is 'totally irrelevant'. You get that a lot - I've heard retail tenants say that only parking charges matter, everything else is irrelevant and I've heard consumers say that the only thing that matters is litter and bin placement (!). The reality is that all of these things matter, and even in advance of a much needed change to the business rates system there is plenty we can do as local communities to make our towns better for every stakeholder.
The placemaking side is very interesting & one that seems to be at the bottom of each councils radar...
One thing providing a bit of success across Birmingham & Coventry is "destination" areas - grouping entertainment, food & fashion in their own mini areas.
For a smaller "town" high street, this might be impractical financially, but creating a community vibe, where people feel safe to browse, chat & buy would be a good start...
One problem with the big cities is the high risk of Crime - again, take Coventry as an example - there is a huge investment into the "food" area of the city, but literally a 1 minute's walk away there is a street that has the highest crime rate in the city...
That is probably a different topic entirely, but one that I know influences a number of people (consciously or unconsciously)
Great points, Jordan. In fact, I think even in smaller towns there can be merit in a bit of 'zoning' - all the boutiques at one end, all the restaurants together etc.
And the point on crime is well made too. I guess debate rages about whether it is a symptom or a cause of urban decay, but one way or another it is definitely relevant.
Thanks for your thoughts Ian, they are some I have been outlining even before Covid accelerated the decline of many of the established High Street brands.
I think one of the main questions that independant, institutional Landlords and local authorities need to address is whether they have an 'aligned view' for how the retail offer should be delivered in their locations to create an exciting destination where the blend of retail, casual dining and experience is worth visiting?. It's no good having a thriving set independants but where the major space lost by the exit of M&S, House of Fraser, Topshop, Gap etc leaves the central shopping area full of large voids. How this space can be reconfigured into smaller usable units or repurposed has a major effect on whether the Town itself stays on the customer's radar or they travel to a totally different location but the time taken to find suitable alternatives takes years currently and this is the biggest challenge given that customers make their decision within weeks or months - I use Leamington Spa as a live example, the shopping centre is a souless structure with large voids, the OOT area in Leamington now boasts more choice of large space retailers with cafe areas and free parking.
Developing the blue print for effective retail space is a requiremnt in most locations across the UK now and not just in flag ship shopping centres so working out the priorities where the space is sustainable over time and drives a return is hugely difficult, what would be the criteria on population, drive time, history, there would crearly be a grading but equally in smaller towns the offer cannot be consigned to just charity locations and coffee shops. A huge challenge that I am really interested in and keen to see how these areas are tackled.
Thanks for sharing the details on placemaking and Institute of Place Management.
Tom, these are absolutely terrific points, thanks for laying them out. The challenge of getting an aligned view between councils, landlords and various types of tenant is a bit one - I come back to the shopping centre analogy in the piece, where you have a single landlord it is easier to come to a considered and 'designed' view of the outcome you want. Indeed, there is a town not far from me where one wealthy investor basically does own the high street, and the outcome is definitely different as a result.
I also really get your point on out of town - more than one town centre has been destroyed by planning permission being given for a glossy edge of town development with free parking, followed by lots of angst in the community about vacancies in the centre!
Thanks again - really great to have you on board and in the discussion.
Thanks Ian, as I said I am following these areas closely and really interested in how the parties involved align to create a single vision and then delivering relevant, interesting and profitable spaces going forward.
One of my favourite places in London is the Mercato Metropolitano in Elephant & Castle. Perhaps I just love eating ... but the concept of communal seating and amazing choice from all the food vendors casts a wide net. It must take quite a bit of courage from those vendors to be in a competitive space though.
Thanks Dave. I think many types of retail and hospitality venue actually benefit from a bit of huddling together - the area becomes a destination and everyone wins. I haven't been to the Mercato before, but will try to check it out.
Ian,
I shared your post with a friend who is a Landlord, and he makes some good points below:
"The big issue is Business Rates. You can “place manage” all you like, but if the property overhead is too high, nothing will work.
There needs to be a recalibration of overall outgoings before the high street can regenerate – Landlords are trying to reduce rents as far as they can, but this is largely pointless as Business Rates remain fixed at pre recalibration levels. What other taxes do you know of where an asset is taxed at 50% of its annual value (and in the case of High Streets, the old value before rents fell).
In many cases Landlords are clinging on and accepting falls in rents but this is only half the story. Landlords with borrowings of more than 50% are stuffed. In many cases, business rates are now higher than the new recalibrated rent – and there’s nothing that can be done about that – that leaves Landlords hands tied in trying to provide a viable overall overhead for the retailer. I know of some landlords who have let their properties go for nothing just to avoid the empty [property rates – effectively their freehold values are now nil.
I am now letting my shops in my local town for lower than the tenants are paying to the council in business rates (previous rents £20k+, new rent £8-9K. Business rates remain at around £14K. That is just wrong, and it is that that is killing the re-birth of the high street – not fanciful thinking about “place management”..
The 3 steps to high street heaven in this article totally irrelevant until the gov fixes high street business rates – until then the High Street is fundamentally broken…
Will, thanks for this and for gathering the often-missing landlord perspective. I'm entirely on board with the observation that business rates are a problem - in addition to the cack-handed way they are assessed and charged, they are also fundamentally a cost you bear whether you are successful or not, and as such are the enemy of investment.
I think the only place where I'd divert from your landlord friend's forthright views would be the assertion that everything else is 'totally irrelevant'. You get that a lot - I've heard retail tenants say that only parking charges matter, everything else is irrelevant and I've heard consumers say that the only thing that matters is litter and bin placement (!). The reality is that all of these things matter, and even in advance of a much needed change to the business rates system there is plenty we can do as local communities to make our towns better for every stakeholder.
Great points again, Ian.
The placemaking side is very interesting & one that seems to be at the bottom of each councils radar...
One thing providing a bit of success across Birmingham & Coventry is "destination" areas - grouping entertainment, food & fashion in their own mini areas.
For a smaller "town" high street, this might be impractical financially, but creating a community vibe, where people feel safe to browse, chat & buy would be a good start...
One problem with the big cities is the high risk of Crime - again, take Coventry as an example - there is a huge investment into the "food" area of the city, but literally a 1 minute's walk away there is a street that has the highest crime rate in the city...
That is probably a different topic entirely, but one that I know influences a number of people (consciously or unconsciously)
Thanks again for sharing your thoughts
Great points, Jordan. In fact, I think even in smaller towns there can be merit in a bit of 'zoning' - all the boutiques at one end, all the restaurants together etc.
And the point on crime is well made too. I guess debate rages about whether it is a symptom or a cause of urban decay, but one way or another it is definitely relevant.
Thanks for your thoughts Ian, they are some I have been outlining even before Covid accelerated the decline of many of the established High Street brands.
I think one of the main questions that independant, institutional Landlords and local authorities need to address is whether they have an 'aligned view' for how the retail offer should be delivered in their locations to create an exciting destination where the blend of retail, casual dining and experience is worth visiting?. It's no good having a thriving set independants but where the major space lost by the exit of M&S, House of Fraser, Topshop, Gap etc leaves the central shopping area full of large voids. How this space can be reconfigured into smaller usable units or repurposed has a major effect on whether the Town itself stays on the customer's radar or they travel to a totally different location but the time taken to find suitable alternatives takes years currently and this is the biggest challenge given that customers make their decision within weeks or months - I use Leamington Spa as a live example, the shopping centre is a souless structure with large voids, the OOT area in Leamington now boasts more choice of large space retailers with cafe areas and free parking.
Developing the blue print for effective retail space is a requiremnt in most locations across the UK now and not just in flag ship shopping centres so working out the priorities where the space is sustainable over time and drives a return is hugely difficult, what would be the criteria on population, drive time, history, there would crearly be a grading but equally in smaller towns the offer cannot be consigned to just charity locations and coffee shops. A huge challenge that I am really interested in and keen to see how these areas are tackled.
Thanks for sharing the details on placemaking and Institute of Place Management.
Tom, these are absolutely terrific points, thanks for laying them out. The challenge of getting an aligned view between councils, landlords and various types of tenant is a bit one - I come back to the shopping centre analogy in the piece, where you have a single landlord it is easier to come to a considered and 'designed' view of the outcome you want. Indeed, there is a town not far from me where one wealthy investor basically does own the high street, and the outcome is definitely different as a result.
I also really get your point on out of town - more than one town centre has been destroyed by planning permission being given for a glossy edge of town development with free parking, followed by lots of angst in the community about vacancies in the centre!
Thanks again - really great to have you on board and in the discussion.
Thanks Ian, as I said I am following these areas closely and really interested in how the parties involved align to create a single vision and then delivering relevant, interesting and profitable spaces going forward.
One of my favourite places in London is the Mercato Metropolitano in Elephant & Castle. Perhaps I just love eating ... but the concept of communal seating and amazing choice from all the food vendors casts a wide net. It must take quite a bit of courage from those vendors to be in a competitive space though.
Thanks Dave. I think many types of retail and hospitality venue actually benefit from a bit of huddling together - the area becomes a destination and everyone wins. I haven't been to the Mercato before, but will try to check it out.
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