Propertyshe Perspectives: Reactions to proposed planning overhaul, the role of SME builders, podcast with High Streets Task Force chair & an American view of creating successful shopping centres

LSE professor Tony Travers, an expert in local and regional government is quoted in the Economist saying: “This is an attempt to weld together completely inconsistent ideas…It could end up being more restrictive not less restrictive”. Having participated in many roundtable debates with Professor Travers over the years, he does have the unparalleled ability to accurately distil the essence of a protracted debate into a meaningful soundbite.

At our annual Mishcon de Reya dinner debate at last year’s Labour party conference attended by local authority leaders, developers and thought leaders, the point was strongly made that with increasing government centralisation, the only power left to many local authorities was planning. The proposed planning reforms that have been tabled do on the face of it appear to further erode this remaining local control.

Darren Rodwell, Leader of Barking and Dagenham Council, executive member for housing and planning at London Councils (and a regular attendee at our Labour Party conference debates) has already expressed a concern. He is quoted in Inside Housing, “Councils play a crucial role in the planning system, safeguarding our communities’ long-term interests and upholding quality standards. While we support ambitions to build more housing, we strongly oppose any moves towards a planning free-for-all – which would lead to lower-quality and fewer affordable homes in London.”

Housing Minister Robert Jenrick insists that the reforms will be good for small builders. They certainly deserve support as small builder output has substantially reduced in recent years. It was apparently down 65% between 2008 and 2017, according to a recent survey by CrowdProperty, a peer-to-peer lending platform offering development finance to SME property developers. Interestingly, the survey also showed that sourcing funding was seen by small builders as a higher barrier to building more homes than the barrier they face with planning.

In relation to planning, Mike Bristow CEO and Co-Founder of Crowdproperty comments ‘the planning system has been a major barrier for SME property businesses building more homes in this country, with the SME segment drastically reducing housing output since the global financial crisis’.

The British Property Federation raise a good practical point in relation to the proposed planning reforms. They said, ‘Local planning departments will need to be better resourced, to ensure pace of delivery is equally complemented by quality - so new development will contribute to our country’s economic, social and environmental objectives’. They point out that ‘spending on the planning system has been cut by 55% – the greatest fall across all council activities – meanwhile housing targets over the same period have increased by 50% to 300,000. These reforms must close this gap.’

The proposed reforms would put yet more pressure on local authorities to provide leadership, vision and context for investors, developers and their communities. And this additional responsibility comes at a time when local authorities are under unprecedented pressure from COVID and will need significant support to deal with increased requirements in relation to local plans. In addition, local authorities are also under huge pressure, as we come out of lockdown, to reinvent their failing high streets and town centres in the face of the collapse of bricks and mortar retail.

My latest podcast as trailed in last week’s blog is with ‘retail apocalypse denier’ Mark Robinson, the newly appointed Chairman of the government’s High Streets Task Force, the new voice for the high street. Robinson was also 2019 President of REVO, the retail property trade body.

We discussed the once in a lifetime opportunity to effect change in our town centres and high streets. Robinson pointed to the polarisation between the exciting entertainment focused centres and the hyper local centres. Both can succeed, he said, but ‘the unexceptional middle’ will get crushed. Robinson is unequivocal on Amazon, whose model he sees as ‘anti- capitalist’ because they aren’t expected to make money until such time as they have a monopoly. Robinson is also clear on the prime importance of data. If Landlords aren’t able to provide data on how their tenants are trading, how will they get investment, he asks. It is available in other jurisdictions so why not in the UK? You can listen to the podcast here or on any podcast platform.

There was additional retail food for thought provided by an excellent webinar with North American Properties Chairman and Chief Experience Maker, Mark Toro and Doug Stephens (AKA The Retail Prophet) discussing the future of shopping centres and retail in a post-pandemic world. North American Properties projects include Avalon in Atlanta, an 86 acre, $1 billion project which has reimagined mixed-use by creating an entirely new urban community in which to live, work and play.

There were references during the discussion to Rick Caruso named by Forbes as ‘the Walt Disney of retail’. Caruso is a Los Angeles real estate developer who has built some of America’s most successful shopping centres. One of these is The Grove in Central Los Angeles, an iconic outdoor mall which pre COVID was seeing some 20 million visitors a year, more than the Great Wall of China! The success of these malls give some useful pointers on what the shopping centre of the future may look like.

Toro used an expression I hadn’t heard before. He described plugging a new residential apartment block into a former retail box in a shopping mall as ‘frankensteining’. The point being that uses should be symbiotic and complement each other. That I agree with, but I’m not so sure about Toro’s suggestion that the reinvention of a failed shopping mall ‘requires wholesale demolition of the mall’ and to start again. This may have the best chance of recreating the community, but is less good from the point of view of sustainability and reduction of carbon emissions.

There was discussion round the need to create community space, referencing Apple and their concept of the town square. Stephens referred to the fact that every European neighbourhood has a town square or gathering place. ‘The shopping centre was the analogue version of Facebook’ he said. This is no longer true so to attract customers you need to provide ‘what people can’t get at home’. Stephens drew an interesting analogy, comparing retail to the early circus industry which attracted people to see the show. ‘The trouble is’, said Stephens, ‘real estate just talked about the tent. Nobody talked about the show!’

When questioned about what would be the new 21^st century anchor tenant, Toro was firmly of the view that the concept of the anchor tenant will not return. Instead, the commercial element of the mall will be the anchor and will draw people in. The shopping mall will be about experience and redefining what communal spaces look like. It’s about building community and more about hospitality and service than real estate said Toro.

There were clear parallels between the Toro and Stephens webinar and my podcast with Mark Robinson as both conversations stressed the vital importance of community in creating a successful shopping mall or town centre. Also the reference to the importance of hospitality and service reminded me of my podcast interview with Scott Malkin, Founder of the Bicester Village Collection. So we have a number of pointers to what works and it remains to be soon how successfully we can revitalise our shopping centres, high streets and town centres post COVID. Hopefully the proposed planning reforms will help to achieve this.

Susan Freeman is a partner at Mishcon de Reya