With life leaving the retail centres of many towns, developers are eyeing up commercial property for residential conversion. With multi tenanted buildings as the end result, are we acting in an appropriate manner or are we constructing ticking time bombs? In many cases, creating residential space from commercial use can create problems, so what issues do developers have to be aware of and what are the pitfalls?
Mary-Anne Bowring, Managing Director of the Ringley Group, gives her viewpoint.
Life has been leaving our town centres for as long as I can remember. Nostalgically one look back and see Britain as a proud nation of shopkeepers, so what happened? Was it the car, the large supermarkets or planning policy that killed off our high streets? What role can developers play in its revival? A recent RICS survey of members identified the decline as being a direct result of the emerging popularity of the out of town retail parks.
Maybe it all started with Henry Ford, who in 1908 said: I will build a car for the great multitude resulting in the Model T. And with the results of the 1908 census showing a boom in car ownership, perhaps Henry succeeded. Car Free Section 106 restrictions were listed in the Road Traffic Regulation Act 1984 and many planning permissions given since then might seem illogical. New developments often sit side by side with existing ones where quotas range from 0.6 spaces per unit to 1.8 spaces per unit. It is then left for the private sector to police the excess parking that migrates from one site to its adjoining neighbours.
Personally, I welcome the long overdue Mary Portas Town Centre Review which was commissioned by government in December 2011, but what will emerge to be the town centre of the future has yet to be seen. It is clear that our largely Victorian or pre-war high streets do not meet modern day requirements; parking provision is poor and expensive, units are often small and lack of ceiling height or opportunities for mezzanine floors, have basement stock areas and are built on a grid system with more structural partitions than is recommended. Business rates are high, and unlike shopping centres a start up rarely gets the opportunity of a turnover rent.
The positives are that unlike the emerging economies (where it is commonplace every 15 years or so for something new and better to be built in another part of town leaving decaying buildings and dereliction behind), generally we in Britain fare better than most when finding alternative uses for buildings. Many high street banks first became wine bars, then gastro pubs and generally we've seen the mass arrival of low cost retailers; the pound shops and charity shops. This is not revival, this is survival.
In most towns and cities transport still converges on town centre, so we need an absolute presumption in favour of jobs being located in town centres. With 10% of every £1 now being spent online, the Internet makes it certain that less of these jobs will, in the future. So not only do I applaud the Mary Portas recommendation of zero rates in town centres but would suggest that the whole town centre rating system needs restructuring. Do return frontages really add extra rateable value? Can we really look at changes in zoning based on a national multiple, probably making a loss at the location with their store lying unrefurbished for years? And if our national green strategy is to use the car less, we need to live where our jobs are. However, the dichotomy right now of live-work spaces is that our town centres are rather depressing places to live!
This government needs to set a vision for the future for town centres; we need streetscapes, turnover rates and a deadline for every Council to put in place a town centre master plan. We are a lifestyle society so the focus needs to be upon what would make a town centre a place to choose to go for a walk and spend time in. Why can our town centres be dotted with children's play hubs?
Why can't we encourage the private sector to put in free Internet hub stations alfresco in our high streets? Lets encourage lifestyle providers to join our high streets where once we had telephone boxes, which we don't need any more? Why can't 2012 be the year that all national lottery funded art simply has to go to our high streets? Let's encourage lifestyle providers to join our high streets, such as hairdressers, nail salons, fitness centres and the make the high street the place to go and get ready for a night out. Say no to supermarket rule, no to soft option planning permissions for supermarkets on our green fields. We have a great compulsory purchase system so let each planning authority have a compulsory purchase officer involved in every larger planning approval. As consumers we're all sick of hearing of the endless profit growth by our top supermarkets at our expense, which is softened not one bit by their poor social agendas, if you spend enough), coupled with the destruction and abandonment of our town centres.
One of our age old problems we face in the UK is highlighted by inner city regeneration, for example, Docklands first, DLR later! This is a classic case of horse before the cart. Whilst central and local government has much work to do, there are real opportunities for developer led town centre initiatives. Firstly one can achieve much higher densities in town centres: secondly, localism is unlikely to present any threats and thirdly car free is less offensive.
Usually there will be a presumption to a commercial ground floor but if one bring 100+ members to get a gym started and offer the user a turnover or rent free opportunity, is this not a community planning gain in-situ? Developers did go through a space of private gym provision in developments only to find that some councils went around shutting these down as the management companies entrusted to their future running could not provide substantive documentation to confirm that all attendees had been inducted nor that a responsible person was on duty.
Nationally we are trying to move away from doctor and dentist surgeries being in converted houses and towards mega health centres: again, this is a great opportunity for our developers to join up with the medical profession and forge new partnerships. So it is now time for the health profession, like the fire brigade and highway departments, to be a statutory consultee in our planning process. With the transport hubs town centred, it is a win-win for both. And, it's easy to find an alternative use for those bonuses that became the doctors and dentist surgeries: after all, many of them were residential properties in the first place.
Why can't all building refurbishment in town centre zones be VAT free? That way there might be a presumption to refurbishing our deserted department stores but inevitably a number of lower rise buildings will need to go, firstly to increase the density and secondly to bring about some car friendly space. Our town centres fix people, and we must bring them back.
Retail buildings do bring challenges for development; we have space to light and air-exchange requirements to meet but does this not bring great opportunities to create on-trend loft style units? Whilst we have overlooking rules with the appropriate screening could this be an opportunity to open up atriums and create internal gardens?
Perhaps if our libraries are to become less space hungry ebook centres then we can propose library buildings for redevelopment and think of e-book centres as a leisure use for the new generation of mixed use town centre developments. This disinvestment from larger library buildings could fund some of the compulsory purchase necessary to stitch together more development-attractive sites.
Town centre development can be frustrated by occupiers in situ. We all saw the banks raise capital by auctioning off their freeholds and becoming tenants, with opportunities still remaining on our beleaguered high streets for more of the same. Department stores could very easily downsize, lose some floors to residential and have new penthouse floors on the roof. Management company structures need not disturb the developers right to the retail rental income, as the developer can grant his investment vehicle a head lease thereby making the retail unit a member of the management company, but removing the investment income.
What's to say that we can't see a structural change by our ground rent investors too with a theme owning not just leasehold reversions but a stake in our high streets? Compulsory purchase calculations include the value of the building plus disturbance: the latter refers to loss of goodwill, perhaps a period of double costs/overheads whilst setting up trade in the alternative location.
Lets expect our government to declare the land ownership structure in town centre zones. For £4 per title this is public knowledge anyway, but expensive and time-consuming to put together. Lets not expect our developers to put this together: lets target local planning authorities to identify and publish this annually and create a forum for contacting landowners thereby enabling opportunities.
This would leave us with the parades on the town centre approach; in so many places they've been lost to being so offensively reclaimed as housing. It's time for a robust strategy, and a design framework to reclaim these areas as housing. It's time for a robust strategy, and a design framework to reclaim these areas as housing uniformly pleasing as a normal Victorian street. We need active strategies published to reclaim these to residential use which would also serve to displace some users back into our high streets. Arguably, the world is now largely brand driven and if Dreams and Sports Direct can boast that acceptable percentages of their stores are in town we need to tell Britain's bigger businesses that the best community initiative you can have is to send the message that cool brands are in town. 40% of Dreams stores are in non-retail park locations. With consumers flocking out of town in the last 10 years, the amount of out of town retail floor space has risen by 30% whilst that in town has fallen by 14%. It is the current planning rules that have allowed these new out of town retail developments to thrive. If together we can orchestrate the moving of the consumer into an experience-led high street then we stand a chance.
According to the Office for National Statistics, Britons spent an average of £539.4m online each week in September, out of £5,613.9m total sales. This 9.6% share is the biggest on record, and is more than three times bigger than the 3% share back in early 2007.
The author: Mary-Anne Bowring is Managing Director of the Ringley Group, a property services company that provides private, commercial and industrial clients with a comprehensive range of property solutions.
Mary-Anne has been involved in the property market industry since 1993 and has extensive detailed knowledge of building law and Landlord and Tenant Acts.
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