Cookies on CoStar Websites
We use cookies to ensure we give you the best experience on our website. If you continue, we'll assume that you are happy to receive all cookies.
CoStar Go CoStar Suite
TAKE THE POWER OF COSTAR
WHEREVER YOU GO
THE ULTIMATE SOLUTION FOR
COMMERCIAL REAL ESTATE INFORMATION
CoStar has the only full inventory database of the UK commercial real estate market, delivered on desktop and iPad, offering comprehensive real-time data, history and analytics.
This ultimate solution helps you know your market even better.
LEAVE YOUR DESK BEHIND... STAY AHEAD OF THE MARKET
CoStarGo is a free app available exclusively to CoStar subscribers which allows you to access comprehensive property, tenant and comparable data all in one integrated mobile interface. CoStar Suite is a complete package of property and market data, sales & lease comparables and tenant information and analytics.
To Find Out More Click Here
Revolutionise The Where You Work

No.1 Commercial Real Estate Information Company

The Portas Review: Too little too late?

By Helen Roxburgh - Tuesday, December 13, 2011 12:30

The hopes of a shopping nation were resting on Mary Portas this morning. The retail guru, who was appointed by the government in May to undertake a review of high streets in Britain, unveiled her 55-page report today. But does it go far enough?

The report focuses on solutions for a UK High Street that it deems to be in crisis.

Her 28 recommendations address the issues of out of town retail development, the powers held by landlords and local councils to promote new retailers and rejuvenate High Streets, and a need to make retail landlords more accountable to tenants and communities.

Portas says her aim is to “put the heart back” into retailing communities and calls for urgent action to prevent Britain losing “something that is fundamental to our society.” 

The property industry industry's response has been mixed.  

The British Property Federation warns that Portas has “fundamentally misunderstood” crucial issues facing the industry.

Portas proposes a number of town centre pilots for her proposals. Some of the measures are fairly straightforward to test – a national Market Day, for example, putting betting shops in a planning class of their own, and retailers publishing information on their support for local high streets in their annual report.

Others are more complex. Portas calls for banks to be made to sell high street assets that come into their ownership if they neglect to manage them properly. However, how exactly this will be put into action is not explained.

Peter Drummond, president of the BCSC, said: "The need to get failing properties off banks' books and back onto the open market has been a key issue for BCSC, and we are proposing a new task force utilising private sector expertise and public sector resources - including but not solely relying upon the CPO regime - to persuade lenders to invest in their assets, or put them up for sale. Such an initiative is crucial to regenerating key town centre sites, which can make or break a town's brand.

"As the review recognises, the business rates regime is a severe hindrance to retailers of all shapes and sizes. The planned 5.6% hike in rates in April 2012 will be the death knell for some businesses, and must be addressed. We urgently need a more stable regime which allows companies to effectively plan ahead."

BPF chief executive Liz Peace says: “For independent retailers to thrive they must be places where people wish to shop. Forcing landlords to offer reduced rent through affordable units is a sticking plaster over a much deeper problem. We will look at the tweaks Mary Portas is suggesting and will do so with an open mind, keen to support town centres, but also to protect UK retail competitiveness.”

A summary of the 28 recommendations from the report can be read here.

Further roll-out of Business Improvement Districts (BIDS) is also recommended, alongside proposals to make organisations more powerful and structured - a model Portas has named “Super-BIDS.”

She hails the New West End Company as an example of a successful BID and says to build on this  the “Super-BID” would become a more structured and sophisticated model. She calls for more use of Compulsory Purchase Orders by local authorities, with more power for local authorities to bring empty shops back into use.

However, Jonathan Riley, a partner at law firm Pinsent Masons, warns: “Portas’ renewed emphasis on targetted compulsory purchase is a little puzzling. Councils do not have the money to buy up individual empty shops, and developers are unlikely to fund councils to do so unless the number stack up.”

The Local Government Association has also criticised Portas for not consulting with them, saying: "Councils play a crucial role in growing local economies and improving High Streets and need to be suitably consulted if they are to achieve this.”

The Portas review also floats the idea of Secretary of State having “exceptional sign off” for all new out-of-town developments – a move which is not likely to be popular in many parts of the industry.

The report reads: “I recommend that big new developments should only be signed off where they include some designated space for smaller retail units for local entrepreneurs. The existing system of planning obligations could be used to secure this, in much the same way as big housing developments are required to contain some affordable housing for lower-income tenants. This will really mean that the high street is not overlooked and town centres are at the heart of retail expansion in coming years.”

The British Retail Consortium says that it supports the town-centre first policy, but warns that "introducing a ‘Secretary of State exceptional sign off’ for all new out-of-town development and requiring an affordable shops quota is unnecessarily restrictive and could tip the balance against some new developments being built. The market must be able to react to shoppers’ needs".

Portas warns that retailers need fewer shops – a trend being followed by many brands including retail stalwart Arcadia – and argues that the rise in supermarket giants has lead to the sacrifice of “communities for convenience”.

Chris Goddard, head of planning at GVA, says: "The problem we've  got is that the pipeline of town cenrte development has completely stalled. So this was always going to be a very difficult review. It's very clear that there is no budget in place.

"The move against out of town development goes against the predominantly pro-development NPPF. The government has consciously been not calling in schemes as it is keen to promote development."

Jonathan De Mello, head of retail consultancy at CBRE, says: “While some of the proposals seem reasonable, these measures alone will not be sufficient to 'save' the high street. The success of out-of-town centres in recent years is largely down to shoppers voting with their feet, and retailers choosing to trade in such centres as a result. Making it more difficult for these centres to trade - which seems to be a key element of the Portas review - would be self defeating, as it is unlikely that these retailers will make wholesale changes to their location strategy as a result.”

Her recommendations include a public register of high street landlords, the implementation of bodies of landlords, retailers and planners to manage high streets – dubbed “Town Teams” by Portas – and more help for new retail start-ups, although managing these without implementing on existing small retailers is a challenge in itself.

The public register concept is designed to "encourage more landlord engagement".

Michael Conneely, of Conneely Tribe, said: "It's a great idea to support local businesses by reducing their rates bills which represent a large proportion of occupancy cost. However, how will any relief be funded and how will it be policed?”

Portas also recommends that developers should make a financial contribution, that local authorities should make more proactive use of Compulsory Purchase Order powers to encourage the redevelopment of high street retail, and suggests more disincentives to prevent landlords leaving units vacant.

Bob Robinson, chairman of planning consultancy DPP, said: “The Portas report does seem to have grabbed the need for proper managing and marketing of town centres, although I’m not sure how this will be achieved however without unity of ownership and alignment of objectives of property owners in those centres.” 

Portas touches on the issue of business rates, saying that another measure to help the industry would be if government adopted the much called for CPI-linked uplift in taxes rather than the existing RPI uplift.

Jerry Schurder, head of rating at property consultant Gerald Eve, said: “What Mary Portas fails to identify is that business rates in the UK are substantially too high for all ratepayers by comparison with property taxes paid elsewhere in the world. Businesses are today paying rates based upon shop rents in the early part of 2008 before the full force of the recession was evident. The solution, assuming that the government is not in a fiscal position to slash business rates, is to make the revaluation system more responsive to changes in economic circumstances.

“Many landlords are letting units at nil rents to charities which can claim 80% rates relief, as well as making ‘donations’ to such charities in order to take units off their hands and avoid empty rates charges. The notion that further ‘disincentives’ are required to prevent landlords from leaving units vacant, is disturbing and worrying.”

The BPF's Peace agrees: “Retailers need more certainty on business rates and have had a bad deal with the link to the RPI over the past 20 years. Moving to CPI is a step in the right direction, though for absolute certainty we recommended a fixed uplift of say the inflation target, which lets everyone know where they stand in advance and would cut administration.”

The dire straits facing many in the retail sector is a well-documented story, with 18% of retailers issuing profit warnings in the last month, and one in every seven shops on the High Street standing empty. According to figures from the Local Data Company, there are 159 towns in the UK where at least a fifth of the shops stand empty.

The Portas Review says it is too naïve to blame supermarkets and out of town retail schemes for draining shoppers away from the town centres, but does call for a town centre preference in future town planning policy.

The report warns: “Although some high streets are thriving, most have a fight on their hands. Many are sickly, others are on the critical list and some are now dead. We cannot and should not attempt to save every high street.”

The government will not reply to the report until the Spring.

Overall, the report concludes that high streets simply have not adapted “as quickly or as well” as they needed to. Regardless of the recession, the growth of online retailing and mobile retailing, Portas concludes that town centres and High Streets have simply fallen behind the more innovative parts of the industry driving the retail market.

For some of these centres, it is too late to recover lost ground. The question remains as to how many can still be saved by the work of this one report.

The full Portas Review can be read here.

hroxburgh@costar.co.uk