by Hazel Nash
With the future of the House of Fraser uncertain following the contentious Company Voluntary Arrangement (CVA), discussions about the future of the high street have resurfaced with greater intensity.
The publication earlier this month of the Grimsey Review 2 coincides with a Commons Select Committee inquiry into the future of high streets and town centres and the establishment of a new expert advisory panel on the future of the high street. Furthermore, a petition has been submitted to the Scottish Courts challenging the House of Fraser’s CVA on the grounds of unfair prejudice against certain creditors amongst other things (see Endnote 1). What is clear is that the retail industry is changing. Whether entering into a CVA or an administration process, the result for the high street and for commercial landlords tends to be the vacating of premises and possibly long-term empty retail units. This does little for the health of the high street, often putting greater pressure on those surviving businesses. Indeed, taking the British Home Stores (BHS) premises as example, research undertaken by Cushman & Wakefield found that just 29% of old BHS stores have been relet or resold, leaving 102 premises empty two years on (Bourke, 2018).
House of Fraser is the most recent victim of changes to the retail sector. Since 2013 there have been 11,858 insolvencies with 416 of these taking place in the second quarter of 2018. A combination of drivers is resulting in what the Grimsey Review 2 Team refer to as “the dramatic structural changes to the retail industry”. In particular these include:
- increases in online retail;
- increases in business rates;
- the weakness of the pound in consequence of uncertainties surrounding Brexit leading to pressure on retail prices; and
- changing consumer behaviour and expectations.
So, what are the options for sustaining the high street? How can landlords of retail premises transform often large spaces to attract businesses, maximise yields, and rejuvenate the high street?
The Grimsey Review 2 argues that clinging to the traditional concept of a high street is erroneous. Redundant stock and vacant premises must be repurposed to reflect the changing needs of society. The review emphasises the need to rethink the purpose of the high street. It focuses on the high streets and town centres being central hubs for whole communities, providing a range of experiences and services in the same place.
In order to achieve a positive future for the high street the Review establishes four key findings.
- All towns should develop business-like plans focused on transforming the place and incorporating health, housing, arts, education, entertainment, leisure, business/office space, as well as shops and a unique selling proposition (USP).
- Dynamic and committed leadership at local level is needed to bring forward such plans for the town.
- Distinct heritage should feature strongly and those developing the plan should seek to address the question “why would people want to live, work, play, visit, invest in the place?”
- Best practice and experiences need sharing through an independent body which can support, question and signpost local authorities and act as a driver for stakeholder support.
Each of these four central findings are broken down to a total of 25 recommendations which are separated into three main elements – Create a more supportive environment; Government and Planning and Smarter Use of Technology. As a Planner, I’m particularly interested in the observations and recommendations relating to Government and Planning. As such I’ve drawn out below the headlines regarding this specific component.
The strap-line on page 23 of the Review, summarizing the role of planning and Governance states: “Planning policy helps and enables change – but is not the driver for delivering action”. The onus for transforming the high street is placed largely on local authorities and revisions to the planning system. Proposals include the extension of powers to local authorities to:
- maintain a list of landlords for commercial properties in towns;
- introduce incentives/penalties for landlords of commercial properties left empty for more than a specified duration; and
- prevent the process of land banking for future speculative developments through a penalties based system.
Proposed changes to the planning system include:
- amending the Town and Country Planning (Use Classes) Order to enable greater flexibility of business use;
- permit the conversion of sub-high streets to residential or other uses within the town plan;
- connect planning applications to the business plan for the town;
- give local authorities ultimate power in granting planning permission in line with the town plan by removing the right of appeal; and
- simplify the Compulsory Purchase Order process to make it easier to enforce for the benefit of the town plan.
It will be interesting to uncover the opinions of private and public planning practitioners, commercial landlords, business owners and members of the public as they digest the content of the Grimsey Review 2.
Whilst the planning system is identified as having a fundamental part in recreating resilient and sustainable high streets and town centres, the accountability of land use planning is fundamental. Withdrawing the ability to challenge decisions cannot be supported on the basis of natural justice alone. Similarly, the proposal to further widen the scope of permitted development rights (PDRs) fills me with dread. Having worked as a Development Management Officer in a local authority for a number of years I have seen many examples of abuse and misapplication of PDRs which can result in profound effects on visual amenity, functionality, locality, character and community. Lastly, the role of landlords should not be overlooked. Indeed, the Review observes “The number of and types of shops being occupied in our towns has continued to change and at a quicker rate” (The Grimsey Review Team, 2018, p.4).
For those landlords of commercial properties facing the threat of vacant premises or servicing redundant high street premises a good dollop of innovation and a reassessment of both expectations and occupation may be the answer. Indeed, pop-up shops, temporary art galleries, events and showcases, start-up businesses and mixed use joint venture businesses are some of the new uses for high street premises. Absent from the Grimsey Review 2 is a conclusion which identifies landlords as part of the solution to resuscitating the high street. This is disappointing, working together to develop a town plan requires the support of all sectors of the local area and to position landlords outside of this is, in my opinion, not conducive to the creation of a sustainable high street future.
As a side comment, my two personal favourite examples of successful repurposing of disused buildings are the Swingers sea-side themed crazy golf course at the old BHS store just off Oxford Street, London and the Rage Room, Holloway Head, Birmingham, a former flat pack kitchen distribution centre. See: https://www.youtube.com/watch?v=-DRANf-aQ_g&feature=youtu.be.
Dr Hazel Ann Nash, Senior Lecturer in Planning Law, Birmingham City University.
Hazel joined BCU in January 2018. She is a planning and environmental law specialist. She has worked in Central Government and local government in planning policy and development management positions and has a particular interest in planning for waste management infrastructure and minerals planning.
Bourke, J. (2018) “102 vacant BHS shops show threat to landlords from collapsed retailers”. Evening Standard 2 March 2018. Available online at: https://www.standard.co.uk/business/102-vacant-bhs-shops-show-threat-to-landlords-from-collapsed-retailers-a3780031.html [accessed 25/07/2018].
Commons Select Committee (2018) High Streets and Town Centres in 2030 Inquiry. Available online at: https://www.parliament.uk/business/committees/committees-a-z/commons-select/housing-communities-and-local-government-committee/news/high-streets-and-town-centres-in-2030-launch-17-19/ [accessed 24/07/2018].
Field, C. (2018) “Tenants and Landlords rethink retail stores with new models for profit”. Retail Connections. 7th June 2018. Available online at: http://www.retailconnections.co.uk/articles/retail-property-market-rethink/ [accessed 16/07/2018].
The Grimsey Review Team (2018) Grimsey Review 2. Bill Grimsey, Corham. Available online at: http://www.vanishinghighstreet.com/wp-content/uploads/2018/07/GrimseyReview2.pdf [accessed 24/07/2018].
Endnote 1: Company Voluntary Arrangements (CVAs) provide a last chance saloon for flailing businesses, the upsurge in their use and the increasingly difficult retail sector has led commercial landlords to file a petition to the Scottish Courts. Essentially, CVAs, whilst all are tailored to the specifics of the circumstances of the business, enable a retailer to opt out of lease agreements with landlords on underperforming stores, vacating them and negotiate substantial rent reductions on other occupied premises.