Who owns the high street?

High StreetCoverage of the Portas Review of High Streets has focused on the usual out-of-town and parking debates. But perhaps the biggest issue raised is that of fragmented ownership. Can High Streets recover without tackling this issue?

UK high streets faced many challenges even before the recession, including competition from other retailing formats, and the growth of internet shopping. Consumer tastes and habits change, and the high street needs to adapt.

The places that have already adapted most successfully are often in single ownership, for the simple reason that shops have what economists call “externalities” – a good shop benefits its neighbours, while a bad one drags them down.

A single owner can take the hit of discounted rents needed to bring in “anchor” stores, knowing that the footfall that follows will sell the leases of the shops next door. And a single owner has the incentive to manage vacancies, to improve the mix of shops, and invest in the environment.

This is most obvious in shopping centres, but also applies to high streets. Those with single, or dominant owners have often fared relatively better. Can the same principle be brought to other high streets?

Some Business Improvement Districts have already begun to take more leadership in property issues, even providing business space directly (such as Camden Town Unlimited’s Collective). The next step for high streets could be to get landowners to pool assets – perhaps through an investment trust, or local asset backed vehicle.

Finding a way for a number of landlords to pool their shops or other assets along a high street would mean the whole could become greater than the sum of the parts, capturing those externalities, and allowing investors to see the returns of managing the entire space. This is a deeper co-ordination than traditional town centre management.

A number of the recommendations of the Portas Review touch on this, including new powers for “super BIDS” with a stronger relationship with landlords not just tenants, or even the encouragement to local councils to use compulsory purchase powers.

Landlords joining forces to manage their high streets also chimes with the new localist approach. It could also benefit from other new tools of localism such as Neighbourhood Plans, and Tax Increment Financing.

It is likely to take a very strong lead – from the council, a BID, or a landowner – to overcome the problems of fragmented ownership and encourage such a joint investment approach. But will High Streets be able to co-ordinate the actions Portas recommends if they don’t also deal with this fragmentation?

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4 thoughts on “Who owns the high street?

    • Thanks. There will be different ways of doing this in different places, and it doesn’t always have to mean single owners, it would be good to see some other models working.

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  2. Totally agree! Without a tenant mix strategy, high streets face a grim future of takeaways and betting shops (and fat children and broke parents!) Generally, very supportive of the review – the focus on the High Street is timely, Mary Portas has kept it high profile enough to ensure it doesn’t disappear without trace and some of the actions are genuinely innovative.

    Particularly welcome the focus on BID’s and urging proactive management of vacancies and tenant mix. We’ve done our best to deliver this, and have exciting plans to expand this work that we can hopefully announce next year. We are also excited about the prospects of a super BID vehicle which will have the ability to hold and manage property as well as have a more direct role in planning. I’ve long thought that BIDs could only have limited impact without this – you can do as much window-dressing as you like with cutting crime/improving pub realm, but without having a stake in tenant mix it’s all basically superficial and will not achieve long term change.

    However, whilst the intentions and actions are mostly good , I think some of the responses to respond to the problems are wrongheaded.

    The big one is urging de-regulation of street trading and use classes. All the evidence in the report points to the fact that highly managed sites (shopping centres, Regents Street, Camden Lock market etc) deliver the best results – in effect these places are ‘regulated‘ by management. So why try to relax these controls on mix?

    The trend in Camden Town (particularly the south end, has been a shift towards takeaways and away from retail (one we are trying our best to arrest!) and I gather that’s the same across the board. By loosening classes, all we’ll do is accelerate this trend not change it. By all means, de-regulate red tape that causes operational problems (waste removal, loading etc) but keep control of the overall strategy for the site!

    Finally, this is also done at a time when public sector resources are being squeezed and basic operations such as cleansing, policing is being cut. The outcome of the what these services do in the future is probably more crucial to the survival of the High Street than anything here, except possibly the property angle. Frankly, if the public sector just concentrated their resources getting this right and enabled BIDs or similar to get involved with attracting investment, holding property and managing estates in the way you say, that would be better than implementing all of the other 27 recommendations!

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