The challenges of attracting investment back to the High Street

Abstract

At the time of writing, the UK remains mired in the longest running economic downturn of modern times. The recessionary shakeout that has ensued has left many high streets (and secondary shopping centres) pockmarked with vacancies. Not all the vacancies are due to economic conditions though. Some of the high street attrition is due to structural change, in particular the continuing retrenchment of chain retailing into larger markets; some is due to the vagaries of high street multi-ownership (a lack of dedicated management control is a common cause of high street decline), and more than a little is due to shopping-unfriendly regulatory controls of one type or another. The long-run failure to invest in adequate parking to serve UK high street shopping, in particular, renders much traditional town centre retail stock hopelessly uncompetitive. Whatever happens on the economic front, the retail investment prospects of high streets will continue to turn, as they have always done, on their commercial effectiveness as shopping vehicles. Investors, of necessity, focus on investment returns not on ‘saving the high street’. High streets that have the potential to deliver competitive returns will continue to attract investment; those that do not — and there are many of them — will not. The high street ‘problem’ in this respect is — and always has been — a productivity issue. As new, more productive, shopping space has been added, more and more of the traditional high street stock has been rendered redundant. The pool of investable high streets has contracted over the years. Mainstream shops investors have meanwhile, for the most part, progressively turned their backs on unit shop investment in favour of managed scheme space: a withdrawal that has exacerbated high street problems by reducing the flow of investment money into unit-shop renewal activities. Without productivity, there can be no town centre ‘vitality and viability’. And in the absence of viability, investment will not be attracted. The author explores the space productivity issues underpinning retail property investment trends and looks at how the prospects for high street shopping are being shaped by market and consumer trends that are not susceptible to influence by protectionist planning policies or regulatory intervention generally. In the absence of subsidy, high streets up and down the country will continue to sink or swim based on their intrinsic attractiveness as shopping destinations.