Breathing new life into our town centres: the case for collaboration in real estate regeneration
The retail industry is going through radical change and, with more and more high street shops standing empty, town centres are in need of a revival. Local councils, landowners and property investors alike are transforming these spaces so that they are no longer just a place we go to shop but rather a destination to meet, live, work and play. In real estate, this trend is demanding a better balance in our built environment between residential, retail, leisure, health, education and office assets. But, what does this mean for property investors? In an age of service and experience-driven consumerism, how do we unlock this potential in our town centres and generate long term value?
1. Identify key sites to regenerate
‘Space’ is a finite resource. Many sites lie derelict awaiting transformation. Space regeneration can create thriving places when combined with well connected, well serviced locations. A major study by independent consultancy, Regeneris has revealed the broad social and economic benefits of the £3bn rebirth of Kings Cross, which capitalises on transport links and seamlessly blends multiple uses on a 67-acre site. On a smaller scale, at Cripps Pemberton Greenish, we are currently working with a local authority to make their £200m regeneration project possible. Their new cultural quarter in the town centre is designed to provide seamless living, leisure and retail around a ‘sustainable community’ of 100 new homes, student housing, shops and leisure facilities. The scheme harnesses the town’s heritage. Tree-lined avenues, courtyards and open spaces will encourage linger time and stimulate a day-and-night time economy. Drawing on the economic philosophy that space and goods are better shared, projects such as these demonstrate movement towards the creation of mixed-use spaces that are connected destinations in which we can live, work and play.
2. Bridge the gap between investors and local authorities to collaborate
Regenerating space takes time and money. Local Authorities often hold the land that is key to bringing forward this type of place-based regeneration. We are increasingly seeing collaborations between Local Authorities and property investors. This combination of forces brings public resources and policies together with expertise and funding from the private sector.
Collaboration projects are generally structured as joint ventures between the Council and the investor. Key stakeholders need to consider:
- how funding contributions will be apportioned;
- the management of affordable housing;
- long term management of open spaces;
- the split of profits/ revenue coming out of the regeneration (between private/public realm); and
- how decisions will be made.
Another consideration is that collaborative projects of this nature necessarily require a substantial investment of time, money and patience to structure and bring together parties with different ways of working. Investors will need to adopt a longer term view on investment, in terms of strategy, rather than seeing the projects as a “quick-fix” to issues on the high street.
3. Prepare and respond to industry and legislative shifts
Thoughtful design and preparation lead to long-term success. Investors have the opportunity to use their professional teams at the earliest stages of the project, harnessing their cross-sectoral insight to anticipate industry trends and opportunities. For example, over the past few years, the Government has considered the decline of the high street in some detail, making amendments to the permitted development rules to provide the flexibility required to help breathe new life into town centres. There are now permitted development rights to convert from various high street uses to residential and/or office uses, with the aim of making it easier to diversify the high street offering, making it more prosperous and attractive both to tenants and consumers. To ensure that their “permitted development” options fit in to and preserve the character of the high street and align with the local authorities plans, stakeholders would benefit from early consultation of their professional teams, before seeking prior approval from the local authority.
We have also seen that temporary, flexible uses can also be a crucial lifeline to urban centres. Temporary changes of use (for up to three years) from traditional retail to uses including community spaces, exhibitions for local schools or for local groups to display their goods. Such flexibility can provide an invaluable opportunity to try out new uses and create a varied high street, without the need for formal discussions with the local authority.
So what are the benefits?
The business incentives to create blended retail, leisure, lifestyle and wellness spaces hang between (1) the need to meet the evolving demands of the choice-rich consumer and (2) a thoughtful, and holistic approach to creating spaces that engender experience. This idea is gaining significant traction across the industry.
Both incentives require joined-up thinking and the eagerness of stakeholders to work together with their professionals to generate value where it has not been before.
Flourishing, mixed-use schemes promote areas as destinations which have long-term benefits for landlords and enhance the value of assets. Embedding the demands of the end users into the fabric of developments will attract consumers. “Excite the mind and the hand will follow”- perhaps Harry Selfridge was ahead of his time, but this statement is a reflection of where the retail industry is headed.