Even prior to the pandemic, we were becoming accustomed to headlines proclaiming ‘the death of the high street’ and witnessing the retreat of big-name retailers from our town and city centres.
After more than a year of national lockdowns, this has only been exacerbated further.
In 2019, figures highlighted a 10% fall in high street footfall over the previous seven years, while 2020 saw retail traffic decrease by more than 40% compared with the previous year.
However, this is not a story of decline, but simply the start of a new chapter in the constant evolution of our commercial centres. Increasingly, CRE landlords and urban planners are recognising that more services on the high street are vital to its future. The savviest retail landlords are looking at how to pivot their assets and stay abreast of changing consumer preferences, and flexible workspace could well be the answer.
There are many reasons for its appeal. These include growing demand from businesses for decentralised office space, shorter leases and bookable workspaces.
In fact, while physical retail has been plagued by the growth of ecommerce and accelerated by the pandemic, flexible workspace has continued to prove a robust and resilient investment. Last year, the sector continued to expand by a further 4% in the UK, despite Covid.
As operators told us for our recent report, ‘Flexing Your Assets: Converting Retail to Flexible Workspace’, businesses are now recognising the benefits of a hub-and-spoke model that combines flexible working with access to high-quality office space.
However, landlords’ appetite for converting retail to flex has not simply been driven by the pandemic. It is a phenomenon that has been on the rise for several years, and Selfridges’ partnership with Fora to provide flex workspace within its Oxford Street buildings is just one example cited in our report.
Of course, the feasibility of converting from retail to flex will vary between buildings. A number of our contributors noted that retail space isn’t traditionally designed to provide extensive access to natural light or a strong mobile phone signal.
Will it be possible to update your building? What types of businesses are already present in the area? What do current rates of population growth look like? Is there transport and parking infrastructure in place? And what competition already exists? Appraising both the macro and micro factors are crucial.
Size is also a significant factor. Currently, the average number of desks per workspace in the UK is between 51 and 100. But while smaller retail units may struggle to accommodate this, there is growing demand from operators for fewer square feet within regional locations, according to Workthere’s 2021 Flexmark report. In fact, although the average space taken by flexible workspace providers in the UK is 19,268 sq ft, 33% of UK flex centres are still smaller than 5,387 sq ft.
Perhaps most importantly, flex workspace needs to offer so much more than traditional office space. Clients expect high-quality fit-out and work-ready space from the moment they walk through the door.
Partnering with experienced operators through a management agreement could be one of the most viable paths to success.
Technology is also crucial – high-speed connectivity, telephony services and robust digital infrastructure all rank highly on a client’s list of expectations.
The high street has an opportunity to evolve – becoming home to a new breed of flex workspace defined by high-quality amenities, robust connectivity and strong hospitality offerings. Retail landlords have a clear opportunity not only to benefit from but also drive forward this trend.