AN INVESTMENT APPROACH THAT LOOKS AT THE SUM OF THE PARTS BEFORE THE INDIVIDUAL COMPONENTS
A COLLABORATIVE APPROACH
In an ideal world where there is available public money through “levelling up”, generally in the form of the Towns Fund and Future High Street Fund, the regeneration story should accelerate.
I have been involved in town centres for over 30 years and have seen significant ups and downs, but the challenge is now immense. Whilst this money is truly welcome, it is essential that those trusted with spending it do it wisely, bring in specialist resources and ideally use it to leverage private sector money to deliver the biggest impact.
Through many years of probing, with plenty of advice along the way from public, private and third sector, we have developed a collaborative process or framework called Place First Economics that can have significant impact on the local economy combined with the built environment. This Framework can work for local economies and for private sector shareholders, so should create an effective platform for this public money to flow through and stimulate further investment. Some councils are beginning to respond positively to this thinking, but they need to be brave and get broad sectoral encouragement.
Firstly, it is imperative to understand that at the heart of the problem is the failing or fragile local economies where the available spend for the lower demographics is really challenged and as town centres deteriorate, more shops close, jobs go, choice diminishes and the higher spending consumers rapidly desert these towns for regional centres or online; the downward spiral accelerates.
The long term problems within retail are well articulated elsewhere within this publication, but Covid has inadvertently elevated town centres to the top of the local, regional and central government agenda, so laser focus is now essential to create places where people want to invest, live, work and spend time. “A body will function much better with a healthy heart!”; better town centres make everything else easier to deliver.
Retail cannot function from purely retail economics driving local economies, it has to work the other way around. But neither can new housing, new public realm, new squares and new green space solve the town centre agenda without addressing local socio-economics as a critical component.
A NEW APPROACH TO OWNERSHIP AND MIX
We have the opportunity of a lifetime through reduced property values for well-conceived long term public private partnerships, to take back more control of the town centres and reduce the negative impact of fractional ownership, but also for essential non-retail uses, to take advantage of the lower rents and come back into the heart of town centres. A future where retail, leisure, mixed housing, civic, health, third and fourth sector uses all co-exist will create the necessary balance; in effect, a return to the past.
We must view shopping centres as prime town centre real estate, with the opportunity to create long term mixed community space throughout the day and evening, altering its functionality accordingly.
It is time to build on the collegiate political spirit that existed through the early stages of Covid, and realise that the health and wellbeing and prosperity of our communities is more important than the colour of the leading party. To understand that economics has been wrongly focussed on growth for growths sake for decades, we need to focus on a more circular style economy, inclusive growth or a form of Doughnut Economics, to help reduce the wealth gap and bring back health and prosperity to our people and their towns.
That will create a sustainable future for the real estate investors.
A NEW APPROACH TO INVESTMENT
Place First Economics Framework is made up of several principles. It creates a governance where decisions must effect more than just one agenda, so for example health and wellbeing, skills and education, sustainability and real estate can all be impacted by one strategy. It’s simply a new common sense way of thinking. All of a sudden the silo mentality that exists everywhere is overridden and we can start to create big economies of scale by joined up thinking. It truly aligns the respective needs of both public and private sector partners in longer term governance and management, with effective and sustainable regeneration.
Whilst short term investors may benefit from chaos created by Covid, short termism is not what the communities need and councils may need to act pro-actively to ensure they get the right partners/investors.
Over the years people have attempted to solve so many of the same town centre issues by applying new sticking plasters, with added layers of cost. Organisations, groups, quangos etc, often with good intention but working alone, are generally ineffective and costly. A new form of public private partnership is what is needed to cut through the layers and get to the root of the issue -local economics.
We have no choice now but to deal with the root cause, but only by embracing local groups in a more bottom up approach will we truly get relevant and sustainable change. The real estate fraternity and local government must embrace seismic change, or there is inevitability in continued decline. But, embrace the new paradigm and there remains plenty for investors to be positive about.
(Original source Savilles.com https://www.savills.com/ReimaginingRetail/place-first-economics/)