Why shopping centre owners should pursue a strategy of developing partnerships with the public sector and vice-versa. Post Covid the vast majority of UK shopping centres will be distressed assets for both owners and the towns in which they begin to decay.
Many owners ( or banks ) have dead capital tied up in shopping centres. It’s no longer generating acceptable returns and as very few owners “ invest to lose less “ – decline sets in. Nobody wins.
Whilst many purchases yielded good returns early on, over the last few years it has become increasingly difficult to achieve acceptable growth due to the physical retail sector consolidating, for all the well understood reasons and now compounded by Covid.
What has become increasingly evident is that where assets are in town centres that are not growing and adapting to change, investors cannot achieve growth and therefore struggle to produce accretive ideas to justifiably deploy capital( if there is any available ) so the decline continues and accelerates…
Shops close, people lose jobs, A and B demographics shop elsewhere, more shops close, more people lose their jobs. Less money is available to spend in the town centre ! How can this be an investable proposition ?
We are already seeing new or even seasoned investors starting to buy or look at double digit yields – “ caveat emptor !“ – a lucky few may take short term profit but this is not a short term game and a bigger picture has to form future decision making.
However, with a true understanding of the community and a very different approach we believe there are always ways to innovate and improve. Covid 19 has made rapid change and adaptability even more essential than ever. We have seen innovation in operators and even adaptability in councils that should already have been happening. Changing consumer habits are more rapid than ever and we need less costly, shorter term, creative change.
Do not be afraid to try things – please understand, no two places are exactly the same and there are many ways of trialling new ideas before committing fully with resource and capital.
If we are to make positive ground, the well -known issue of fractional ownership must take account of the public realm. By combining public and private assets we believe in 2+2=5 results. If we can get more control over a town centre through use of a public /private model and use our concept of Place First Economics as a new way of governance, we can make a difference to both the outlook for our real estate and influence economic outlook.
So much capital is locked up in a declining platforms and we need to find ways of re-energising it.
Councils who have purchased shopping centres on their own are taking massive risk – many will be close to negative cash flow.
We believe in a future where the public and private sectors can come together to solve this decline via a new form of Public Private Partnership.
Whatif… with its blended expertise in both public and private sectors can make this reality. We can show a way of making this work so both sides can see a better future and achieve their respective requirements and outcomes. The pressure of ESG, the UN-SDG’s and an increase in general kindness is making this more plausible.
We aim to create a truly win win win outcome;
Councils get to benefit from private sector thinking and returns on their capital invested, create social impact and a platform for growth economics.
Shopping centre owners get to recycle dead or dying capital, re-activate it through further co-investment, enhance return and recycle some of it into higher yielding growth assets inc potentially further investment with councils.