Fuelled by attention-grabbing headlines, the struggle of the UK high street against online competition cannot have escaped anyone’s notice.
Thousands of mouse clicks seem, on the face of it, to be giving a death sentence to the high street.
But this common stereotype only tells one side of what is, in reality, a much more complex and indeed positive picture. There are many high streets across the country that need reimagining, but far from dying out, there are also plenty of strong regional cities and market towns that offer the potential to create real value - you just need to know where to look and have the tools to unlock it.
We launched the Hunter UK Retail Trust last summer to focus wholly on investing in retail units within thriving, high-street-led locations that cater to affluent, upper-quartile catchment areas. Contrary to the typical negativity associated with the UK’s high streets, we are confident that the right investments in these locations can match or improve the returns we have previously generated for our investor base, including the superb performance of our Retail Plus Property Trust.
But to ensure success investors need to understand the needs of retailers and their growth plans. In reality, bricks and mortar still play an immensely important role alongside a complementary online offer, acting as a shop window for the customer as well as assisting with online deliveries. The recent move by Amazon to trial high-street stores illustrates that retailers must consider all possible channels to be successful. In order to capitalise on this trend and discover the significant potential value in the high street, investors need to harness experience in selecting properties with real asset management potential in the right locations.
Key to this is investment in areas with a strong identity and thriving mixed-use provision, where retail is complemented by a strong leisure offer. An attractive tenant mix encourages consumer dwell time and spend, and will see retailers seek to not only maintain existing accommodation but actively look to secure the right accommodation going further. To achieve this, it is necessary to have pockets of properties in towns and cities owned by a single, experienced landlord that can actively manage units and create the configuration of space required. It is with this in mind that we have already purchased our first assets in Ipswich, Norwich, Edinburgh and Chester; investing over £22m into the UK high street since the fund’s launch, with more acquisitions to come.
Where it used to be enough simply to invest in the right street in the right town - it is now about investing in the right property, in the right street, in the right town. With the right ‘deal-by-deal’ approach, investors such as ourselves can ensure they are well placed to find opportunities and seize them - to the wider benefit of the town’s retail offer and the general public.
While retailers may be looking to consolidate their portfolios, it is abundantly clear many are also being increasingly drawn to take space in thriving high-street-led towns throughout the UK that offer the right retail and leisure mix. With increasing occupier demand in these locations, real opportunities for consistent returns in particular pockets around the UK are available to the skilled investor. Far from the much-publicised ‘terminal decline’, many high streets are alive and well, and I expect to see investment strategies increasingly reflect this reality over the next few years.
Andrew Moffat is fund manager at Hunter Real Estate Investment Managers