Initial thoughts on the Levelling Up and Regeneration Bill
The recent Queen’s speech making moves to compel Landlords to ‘let empty shops’ is no surprise, but nor is it any cure for the High Street malaise.
As part of the so-called levelling up agenda (Levelling Up & Regeneration Bill), landlords will be forced to let out retail units that have been empty for more than six months. Local Authorities will be empowered to let out empty properties for lease.
The devil may well be in the detail to no doubt follow, but the scheme is clearly flawed. It overlooks the fundamental issue – that supply of, and demand for, High Street shops is far from level. Supply has risen and demand has fallen inexorably since the recession triggered in 2008, primarily accelerated by the growth of e-tailing and relative unattractiveness to retailers of operating shops due to costs, not least business rates.
The so-called Compulsory Rental Auctions are not going to create new demand.
There also appears to be a naïve assumption that ‘Landlords’ (no such thing of course without a ‘Tenant’) – owners – are deliberately not letting out shops. As void rates relief only applies for three months, and empty shops invariably deteriorate relative to occupied units, letting even short term at nil rent is self evidently preferable to the owner than a continuing long term void.
The reality is of course that in so many once-bustling retail locations, demand will never return to the level required to absorb the now-massive supply of retail properties, so much of which is now functionally obsolete. Shops which were bespoke and built to suit bricks and mortar retailing formats are now gone. From the purpose-built shop for Argos (uniquely holding several of anything and everything on-site at every store) to shops of 4,000 – 7,000 sq ft specifically created to meet fashion retail demand of the 1980s and 1990s, and Department store format.
We were still building and extending shopping centres over the past 10-15 years, knowing that in reality demand was past its peak and moving to terminal decline.
Significant redevelopments of town and city centres are inevitable, to clear functionally obsolescent buildings and create spaces that are attractive for people to come and live, work and play. This is nothing new under the sun. These large scale redevelopment initiatives tend to be led by public bodies, with the private sector either following on or working in partnership. A recent significant example is Nottingham City Council’s entire demolition of the Broadmarsh Shopping Centre and the redevelopment to follow. Several dated Shopping Centres have been bought by Local Authorities around the UK in recent years, probably with an eye to similarly ambitious but inevitable redevelopments to the town’s nucleus and public realm.
We are in that transition phase, perhaps accelerated to it by covid, then with the resultant pressures on public finances perhaps holding us in it for longer than preferred. Compulsory Rental Auctions are not going to have any positive impetus for this inevitable evolution. Few prospective Tenants want the outmoded properties, nor the maintenance liability. Nor do the owners!
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