Turning the tide for seaside regeneration

Many seaside towns are caught in a cycle of economic and structural decline, born out of historic drops in demand for traditional domestic beach holidays. Low-cost foreign package holidays have undermined the viability of the local economies on which many coastal industries were built. Economic stagnation, physical disinvestment and social challenges reinforce each other in complex ways, creating a set of conditions that undermine the future prosperity of place. EG’s report, “Turning the tide: seaside regeneration”, reveals that seaside towns are more likely to be deprived than their neighbouring communities, as well as other areas of England. They also suffer myriad unfavourable economic measurements – suppressed earnings, an unbalanced housing market, a weak labour market, increased levels of benefit claimants, higher levels of crime, and poor standards of education. As a result of these detrimental variables, their overall contribution to the UK’s GVA has decreased annually since 2000. Suppressed activity from new business and investors has reduced commercialisation in many towns, although some have managed to turn around their fortunes, reinventing in the face of physical obsolescence, dereliction and outdated infrastructure. In recent months, a secondary challenge has emerged. The implications of the coronavirus lockdown look set to hit seaside communities harder than most. People employed in seaside towns have been most exposed by the lockdown measures, with over a quarter of employees in coastal towns in affected sectors. Given that coastal employment continues to rely heavily on hospitality and catering trades, it is unsurprising that the proportion of businesses that applied to furlough staff under the Coronavirus Job Retention Scheme is far higher on the coast than inland. Negative spiral The challenge is two-fold. A short-term crisis comes from the shutdown of most seaside enterprises and employment. A longer-term issue will centre on whether and how these communities manage to bounce back. The role of real estate in a coastal renaissance is of utmost importance if these areas are to rebound after coronavirus, and if the current government is to meet its “levelling up” agenda. Many coastal communities feel as though they have been left behind politically and economically through the post-financial crisis measures of austerity, arguably highlighted by the fact that over 90% of English coastal authorities voted to leave in the 2016 EU referendum. Social inequality in these areas can be directly attributed to the stagnation of core industries such as fishing, shipbuilding and port activities, as well as the challenges of seasonality and domestic tourism. But regeneration of seaside towns is made even more difficult by their relative remoteness and distance from major cities. The role of commercial real estate Real estate will play a critical part in any transformation. Radius Data Exchange analysis shows that commercial leasing and investment activity remains at odds with national UK averages in seaside towns. Retail leasing remains the dominant driver of growth on the coast, accounting for one in five commercial real estate transactions, while office-based deals lead the way throughout the rest of the UK. This seeming move against the grain of market fundamentals reflects the current make-up of the economies. Encouragingly, investment into real estate at coastal destinations has increased year-on-year since 2014 from £860m to £1.73bn in 2019. This has led to a surge from 1.5% of all real estate investment in the UK to 6% in the years since 2012. At the same time, local authorities on the coast have started to inject capital into their assets as access to cheap debt has offered a way of revitalising property. Both private and public regeneration experts working to revive struggling seaside towns are thus left with a set of complex and intertwining questions: How do coastal communities shake off the legacy of disinvestment and reinvent their offer to tourists, residents, businesses and investors? What can seaside towns do to ready themselves for emerging markets, economies and growth sectors? In the wake of coronavirus and the effect on coastal industries, how can communities avoid succumbing to economic obsolescence in the future? What is the role of real estate in securing the future of these destinations, and what are the opportunities for those invested in the built environment? The challenges faced by communities locked in a spiral of decline was accentuated by the decade of austerity, but now they face a greater task to navigate and survive the coronavirus pandemic. The regeneration and reanimation of these places will be defined by experts in the private and public sectors – as a key pillar of the UK economy, commercial real estate’s contribution to this process could aid the eventual renaissance of struggling seaside towns. Click here to read the report in full  To send feedback, e-mail james.child@egi.co.uk or tweet @JamesChildEG or @estatesgazette