There’s no escaping the negative headlines around retail at the moment. However, there’s been an oversight in the reporting that ignores the nuances of what is happening in each individual market. It is undeniable that retail is undergoing a structural shift, driven by a change in the way people shop and what they expect from physical stores. However, this has created opportunities to revive those shopping centres and towns.
In the second half of this year we have seen a slight uptick in shopping centre investment as volumes reached £295m, slightly up on the same period last year. Councils have been particularly active in the market: in the first half of 2019 local authorities completed five acquisitions, all of which were in their boroughs. This group accounted for a 16% of H1 volumes. Much of the rationale from councils is that by buying the local shopping centre they can create a social return, rather than an economic one. The focus here is on rejuvenating the town and improving it through the lens of the local population, rather than a strictly profit rationale.
It is not the case of a one-size-fits-all. Prime shopping centres such as Lakeside and the Trafford Centre retain their dominant status. It would be foolish to create a new Trafford Centre in a convenience driven scheme located in a small market town. Each centre has its own needs; repositioning surplus retail space into late-night food and beverage offerings might be more viable in a town with a strong student population than in one with a large elderly population.
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There’s no escaping the negative headlines around retail at the moment. However, there’s been an oversight in the reporting that ignores the nuances of what is happening in each individual market. It is undeniable that retail is undergoing a structural shift, driven by a change in the way people shop and what they expect from physical stores. However, this has created opportunities to revive those shopping centres and towns.
In the second half of this year we have seen a slight uptick in shopping centre investment as volumes reached £295m, slightly up on the same period last year. Councils have been particularly active in the market: in the first half of 2019 local authorities completed five acquisitions, all of which were in their boroughs. This group accounted for a 16% of H1 volumes. Much of the rationale from councils is that by buying the local shopping centre they can create a social return, rather than an economic one. The focus here is on rejuvenating the town and improving it through the lens of the local population, rather than a strictly profit rationale.
It is not the case of a one-size-fits-all. Prime shopping centres such as Lakeside and the Trafford Centre retain their dominant status. It would be foolish to create a new Trafford Centre in a convenience driven scheme located in a small market town. Each centre has its own needs; repositioning surplus retail space into late-night food and beverage offerings might be more viable in a town with a strong student population than in one with a large elderly population.
Repurposing space provides owners and developers with the opportunity to create varied tenant line-ups in their existing portfolio, many of which form part of increasing their “alternative” exposure.
Understanding the needs of the catchment population is crucial when it comes to repurposing. Convenience centres that provide vital services such as healthcare, foodstores or a library are still important. Dominant prime shopping centres are still busy, and are adapting to the desires of customers by creating more leisure – for example, Flipout the trampoline and inflatable park in intu Lakeside.
This leaves the middle swathes of retail space that is neither prime nor convenience driven. These are the centres that would benefit from a strategy that brings together an innovative and cross-sector approach to reducing vacant space or developing surplus land.
Repurposing retail space doesn’t have to mean reducing the retail footprint; instead, it is about re-creation and recreation; creating a space that has a sense of fun to it and breathing life back into the empty units. A new trend in male grooming has created a boom of barbers looking for new space. Discount retailers remain acquisitive and are on the lookout for new locations with a strong residential catchments. A host of other uses exist and their success depends on recognising the local demand and configuration of space.
Vacant units are also being used for anything from co-working space, food halls, educational campuses and even tech and labs. With the addition of such occupiers the centre once again becomes an important community amenity.
There has been a lot of discussion around the importance of residential in repurposing retail. Local councils are under pressure to create more housing, there’s a growing demand for student accommodation and the private rented sector is attracting significant interest from the alternative investment investors.
Residential alone isn’t the silver bullet, however. A mix of solutions will help create footfall. Retirement living has seen a shift away from landscaped communities into centrally located apartments, from which residents can easily access all that the centre has to offer, including cinemas, local restaurants and bars and healthcare facilities. At the other end of the spectrum, people are more likely to work in town centres if their living accommodation is nearby, boosting employment levels as well as creating a buzz. It is hard to overstate how important creating a sense of community, place and purpose is the key to the success of any town or city centre.
