Coverage 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?