The high street and the shopping centre have been dying a well publicised death now for a few years. To many of us this is obvious to the naked eye, you just need to walk around your local area. There are more and more empty shopfronts to let and 2019 saw a number of large brands go into administration. HMV was bought out of administration, as was Debenhams, Clintons and Mothercare. Rising costs and lower footfall are making a traditional shopfront harder and harder to maintain. Springboard, a retail analytics company, estimate that footfall is down nearly 5% over the last 4 years and that trend is steadily increasing. That is combined with research from A&M and Retail Economics stating that companies are spending 10.8% more on business rates, rent and wages. It certainly paints a bleak picture for the high street and shopping centres.
But what effect is this having on where we rent?
I think there are two different effects playing out here. The first is that we are now more free to choose where we live. In deciding where to live, we consider a myriad of different factors. Affordability, transport links, length of commute, crime statistics, local schooling and many many more. The decline of the highstreet and the overall decentralisation of retail commerce due to the rise of online shopping means that is one less thing to consider and allows you to focus on the other aspects you desire in a property. It has a simplifying effect on what is a very important decision. This does beg the question though of what is happening to all this newly free space.
The second effect is a more direct consequence, the decline of the retail high street is has lead to the creation of more housing. Statistics show that in 2019, 27.7% of all change of use applications to residential C3 were from high street retail space. This number has nearly doubled from 13.9% just 5 years ago. This is even more prominent in the capital with over a third of all shopping centres having plans for new homes. Combined this equates to over 13,000 new homes which will surely help with the shortage of rental supply in the capital. This is sorely needed at a time in which rental demand has remained strong for rental properties but there has been a dip in supply.
The decline of the high street is certainly not something that we should be welcoming with open arms but as its value diminishes it does open up opportunities for both developers and tenants alike.