Flexible planning policy needed to save the UK high street

Out-Law Analysis | 16 Dec 2020 | 10:37 am | 3 min. read

Creative policy and regulatory interventions will be needed to save the UK’s high streets after a turbulent year in which some of the biggest names in retail collapsed.

A rigid approach to asset management and planning will accelerate the demise of town centres. Landlords will need to embrace a more symbiotic relationship with their tenants and local authorities; who will have to consider ways to more readily allow schemes to be redeveloped and to help that process using their land assembly and compulsory purchase powers.

Covid-19 has resulted in a dramatic acceleration of the restructuring of the UK’s high streets and retail parks. The industry has been grimly hanging on to ‘bricks’ retailing while ‘clicks’ retailing has emerged as the very clear winner. Arcadia Group and Debenhams recently became the latest businesses to fall into administration, all the while again the backdrop of the rising value of Amazon’s stock.

Gilbey Iain

Iain Gilbey

Partner

The 'old' high street may be dead, but there is plenty of scope for a 'new' high street to succeed.

Now landlords, their investors and funders and local authorities are considering what the future of our high streets might look like. There is no universal panacea. As things stand, many shopping centres are stuck between an unrealistic ‘book’ value in which is embedded an expectation of investment grade long leases with upward-only reviews, and an asset and land value that reflects a dash to flexible and turnover leases or a wholesale repurposing strategy. Until book value approaches actual asset and land value, repurposing options will be limited.

Policy and regulatory interventions from central government this year have arguably come too late. They included an emergency review of the Use Classes Order, creating a new flexible town centre ‘Class E’ which allows an easy switch between, for example, retail, cafe, restaurant, office, gym, health centre, day nursery and creche uses, without the need for a separate planning approval.

The government is now consulting on a new permitted development right to allow Class E premises to be more easily converted to ‘Class C3’ residential use which is explicitly, in the words of the government, aimed at giving high streets “a new lease of life”. It has also instructed local authorities in England to temporarily suspend planning enforcement activity relating to extended store opening hours during the festive period - another welcome intervention albeit one which, with the country in semi-lockdown, will have limited impact.

The English planning system’s traditional approach to town centres - in which the shopping mall, ‘big box’ and long lease retailing was protected - has been woefully out of step with retailing reality for too long. Increasing consumer and market capriciousness, to say nothing of the varying levels of lockdown experienced across the UK during the pandemic, has required an agility and flexibility that the current system does not have.

Once the dust has settled on 2020’s high street losses, there will need to be a coming together of all involved in our high streets - not just the landlords and their investors and the leading retailers, but local authorities and the communities they represent. Once value expectations have aligned and real repurposing has become a workable option, all potential uses will need to be put into the mix.

In this new model, the success and failure of landlords and their tenants will be much more closely aligned. Agreeing a 10 year lease and waiting for the rent to roll in will rarely be an option. There will need to be greater synergy between those owning the assets and those paying their rent. Landlords, more than ever, will be looking to ramp-up footfall and ‘dwell’ times, with new complementary leisure, food and beverage facilities, and cultural events.

As working and personal lives have coalesced in 2020, so must the activities that we undertake in our town centres. Undoubtedly we will see the renaissance of town centre living including build to rent, student and later living, but that will only be an attractive proposition if our town centres retain economic activity, life and drama. Flexible work spaces and cultural and sporting facilities, both virtual and real must therefore be part of the new mix.

The precise range of uses will be location dependent. What might work well in Covent Garden may not be appropriate for Coventry. What they will have in common, though, will be a much more flexible and agile approach to changing land uses and lease and rent structures, and a more flexible and supportive planning environment. The 'old' high street may be dead, but there is plenty of scope for a 'new' high street to succeed.