DEVELOPMENT & PLACE

WHAT MAKES A TOWN RESILIENT? In the recent report UK High Streets: Dead or Alive?*, Cushman & Wakefield used 22 variables to rank 250 high streets, dividing them into five broad tiers. Some results were predictable: for example, around half of the high streets in the top two tiers are located within London and the South East. Others less so: top tier towns have a comparison spend eight times higher than bottom tier ones, low levels of comparison floorspace provision (sq ft per 1,000 population) and high spend densities (£ per sq ft). High Street retail resilience is more closely correlated with affluence than catchment size and more resilient locations are those most likely to be actively managed to improve the offer to the consumer and wider business community, resulting in significant rental increase. Resilient towns aren’t threatened by online retail. People in these locations are the most likely to spend online. This suggests that locations with a compelling offer will continue to thrive irrespective of the internet. Resilient towns were more likely to feature improvements to housing supply, transport and other infrastructure. Considering how an existing mix could be altered or a new one created will require considerable expertise to fully identify existing occupational demand. From just a quick glance at the accompanying map it is obvious that a significant number of the largest pipeline schemes are in London. Schemes outside London tend to be situated in strategic growth areas where they are acting both as a catalyst for new development and simultaneously benefiting from the enhanced infrastructure and improved demographic profiles in these areas. The only project which is shopping centre-focused (Edinburgh) is a redevelopment of an existing centre, suggesting there is potential for similar prime schemes to be either redeveloped or extended, which may not be at their optimum size due to past economic, occupational or planning-related issues. These key projects allow us to extrapolate the five main enablers of future mixed-use regeneration projects: • Unsurprisingly, location remains key, though the emphasis may be moving towards a more sophisticated analysis in which rental and/or capital growth (which in turn affect the availability of funding) replaces a geographic-based methodology. • Strong civic leadership and public sector backing are vital to provide investor and occupier confidence. Regional devolution, including the emergence of elected mayors, could be helpful, though political wrangling is a potential downside risk. • Physical infrastructure projects, boosted by a surge of investment capital seeking a safe return, are likely to improve accessibility to a wider proportion of the local population. This in turn increases the viability of regeneration schemes within a certain radius. Transport hubs, in particular, offer significant potential for mixed use development. • Successful areas with a strong occupier base and stable or growing footfall will attract the most investor interest, as development risks here are perceived to be significantly lower than elsewhere. However, the expansion potential of any particular site will need to be carefully considered, taking physical and demographic boundaries into account. • For the many parts of the UK experiencing a chronic shortage of housing, mixed-use developments are likely to be able to unlock sites in a way mono uses simply could not. Thanks to innovative design and construction techniques they are also likely to act as standard bearers for the creation of sustainable places. Locations keen to facilitate major regeneration programmes will need to consider how they engage with a development industry that is understandably less interested in areas perceived to be at the less resilient end of the scale. The fact that Cushman & Wakefield research shows nearly 4m sq ft of mixed-use urban development is proposed in the top 10 locations compared with only c 400,000 sq ft in the bottom 10 (i.e. a difference of a factor of 10) underscores the scale of the problem facing locations ranked as least resilient. Conversely, developers who are open to new and innovative approaches from enabling stakeholders could reap rewards by unlocking individual schemes, irrespective of where the broader location stands on the resilience scale. Residential- and office-led developments dominated the proposed schemes in the top 10 towns, whereas retail and residential feature more heavily in the bottom 10. Crucially, in these least resilient places, offices do not feature as part of the mix in any of the proposed developments. Resilient locations are more likely to have established and thriving retail pitches, so retail is likely to be a lesser part of the mix for new regeneration projects. In contrast, less resilient locations offer greater potential to include retail in any mixed-use regeneration proposals. CUSHMAN & WAKEFIELD VIEWPOINT While a large proportion of mixed- use regeneration schemes currently in the pipeline are located in and around London, we believe there remain a significant number of opportunities in regional town and city centres. Developers and investors who identify forward- thinking local stakeholders in areas where significant physical infrastructure improvements are planned aremost likely to conceive schemes with favourable returns. Themix of uses within new developments will undoubtedly broaden, however, ‘development lite’ regeneration schemes may well becomemore common in less resilient areas, where funding issues limit new buildings. In these locations it is highly likely that former single use schemes are retrofitted for other users. The capital value growth prospects for such developments are likely to be of considerable interest to investors, whomay have previously written off a location as too risky. Less resilient towns require visionary and creative thinkers to unlock their potential. Considering how an existingmix could be altered or a new one created will require considerable expertise to fully identify existing occupational demand and suggest how alternative demandmight be generated. Developers, as well as existing investors and occupiers in these locations, should encourage individuals and organisations who demonstrate innovative approaches – it could ultimately be in their own interest to do so. Above Battersea Power Station * Read the report at www. cushmanwakefield. co.uk/research-and- insight/2018/ uk-high-streets- dead-or-alive 40 41 CUSHMAN & WAKEFIELD DEVELOPMENT & PLACE