Alexander Graham Bell’s words of wisdom “when one door closes, another opens” are well known, but less famous is that he went on to add “but we often look so long and so regretfully upon the closed door that we do not see the one that has opened for us”.
Much has been said about the problems facing our high streets – the most recent being Covid-19 and whether it is the last ‘nail in the coffin’ of physical retail.
Perhaps it is time to stop looking at the closed door of failed shopping centres and falling retail property values and consider the opportunities that might lie behind the doors that are opening.
The renewal and repurposing of our town centres requires innovative thinking and a new approach from all the major stakeholders. The door that has opened is that of the need for more residential property. The opportunity to create a variety of housing – whether it be BTR, PRS, later living or student housing in the centre of our towns and cities – is an appealing prospect.
There is little danger of oversupply on a national level, and residential can be the key to development, creating thriving, sustainable places.
As mixed-use schemes become more integrated, it will be fascinating to see how the market evolves to create the new diversified assets investors are seeking. Businesses that best understand this integration will be the ones that flourish.
It is undisputed that we have too much retail space in our town centres. New offices and residential space can replace a lot of this, but retail, leisure and hospitality are still vital to create a sense of place at the heart of the community.
Not all retailers are failing and many, such as Apple, Lululemon, JD Sports, L’Oréal and Next, to name but a few, have adapted and created new concepts.
There are also hundreds of new independents opening every year that will be the lifeblood of our towns and cities, giving them individuality and reflecting their communities.
We need to make sure we help these entrepreneurs thrive by replacing investment barriers that stunt growth, such as outdated lease structures and an archaic rates system.
Physical retail will continue to have an important place in our towns. There will be much less of it, but it will be more relevant. Leisure and hospitality, along with well-thought-out events programmes, will also elevate the customer experience. While this sector may be one of the last to return to normal trading after Covid-19, it could be among the first to recover, as there’s no doubt people have put more value on human interaction and experience in our digitally dominated world.
The UK has led the way with the diversity and variety of different options to drink, eat, stay, exercise and play – from street-food vans, food halls, dining and drinking emporiums and competitive socialising venues to boutique hotels.
New capital will be required to bring about these changes. In the past, developers have packaged shopping centres to maximise the return to investors. But measuring success purely by financial returns has not produced sustainable projects, as the collapse in the value of many retail properties testifies.
Our industry has a once-in-a-lifetime opportunity to get this right. Success should not be measured by profit alone but by the benefit we have had on people’s quality of life.
Stuart Harris is chief operations officer and James Lidgate is head of residential at Milligan