Cambridge has again been named the most resilient retail location outside London in Cushman & Wakefield’s second iteration of its report on the performance of the UK’s town centres. Manchester and Liverpool remain in the Top 30 at position 25 and 26 respectively.
Manchester has also been named one of only two locations outside the South East falling into the ‘Very High’ growth category.
The report, which analyses the performance of 250 town centres since the start of the financial crisis, is based on 24 economic, demographic and retail property metrics, and highlights the evolving role of the UK’s town centres.
As consumers become more mobile and less reliant on physical stores, expectations are changing, with retail driven increasingly by ‘shopper mission’. These missions generally fall into one of three categories: large destination, or experience orientated visits, purpose shopping that is focused on specific purchases, and community-based convenience trips. The report reveals that retail locations that do not align with at least one of these key missions will need to repurpose to remain relevant.
Amy Gibson, Senior Research Analyst and report author, said: “Our rankings look at a number of different measures and metrics which contribute to the vitality of a town centre. The retail mix is clearly important within that but it is not the only factor. In our view, the first step to understanding whether the UK’s town centres are fit for purpose is to understand what the new purpose is for each location.
“The retail and leisure landscape in the UK’s towns has become increasingly homogenous and in many cases not really kept pace with the changing demands of consumers. As we see a growing proportion of retail shifting online, there is a need to introduce alternative uses in town centres to help differentiate locations and ensure they remain aligned to the local catchment. Shops must adapt to this as well and provide what people want and not just an identical template of other locations.
“The towns within our top 10 are navigating the fast pace of change best and offering visitors a variety of reasons to keep coming back.”
The report also examines some of the common factors impacting underperforming UK town centres. For example, nearly a quarter (24%) of the towns in the bottom 50 of the index are classified as Seaside Towns, for example Torquay and Scarborough. Whilst tourism was once the main driver of the economy in these locations, low cost international travel has eroded their popularity. This is reflected in the relative tourist spend figures of the bottom 50 locations, which is on average 85% lower than in the top 50 performing town centres. The exception is Brighton which is thriving and which features in the top 10 for the second year running.
Opportunities for Growth
Within the report, Cushman & Wakefield has also graded locations in the index from ‘Very High’ to ‘Very Low’ according to expected growth in consumer demand. The grading considers population growth, age structure, growth in disposable income and planned housing delivery.
The majority of expected growth is concentrated in London and the South East. Benefitting from overspill from the capital, these locations are expected to see working age population increase by an average of 2.5% over the five-year forecast period. Locations such as Ilford and Romford are projected to see working age population increase by 5.6% and 5.2% respectively.
Manchester and Exeter are the only two locations outside the South East falling into the ‘Very High’ growth category. Both cities, which benefit from a large student population, are expected to continue to attract a larger proportion of capital going forward, both financial and human.
On a regional basis, growth in northern England, Wales and Scotland is forecast to be lower than southern England, albeit with pockets of growth in and around Edinburgh and Glasgow.
From a pure property perspective, the report also examines changes in retail rents across the 250 locations. Prime rents have fallen by 58% in real terms over the past 11 years, with no evidence of real rental growth in any of the towns.
Compared with last year, rent as a proportion of retailers’ spend has fallen from 12.8% to 10.2%. This suggests rents are beginning to adjust to more sustainable levels. Given that rent should typically account for between 10-12% of turnover, there are some 69 locations in Cushman & Wakefield’s index that still appear ‘overrented’. In general, these locations are situated in Greater London and the South East, where prime rents are higher, although many of these areas have categorised as either ‘Very High’ or ‘High’ according to the Growth Potential Indicator, which may go some way towards sustaining these high rents.
George Lowe, Surveyor in Cushman & Wakefield’s Retail team in Manchester said: “Challenging conditions in the Northern retail market have persisted over the last 12 months, but we have seen further evidence of evolution in the sector, which continues to adapt to changing consumer trends.
“We have seen a rise in non-traditional retail uses on High Streets, including gyms, medical uses and leisure, whilst traditional high street operators have continued to adapt their offering to consumers. The recently opened Yorkshire Bank on Market Street for example is home to a pop-up clothing concession and coffee shop creating a much more holistic experience for the consumer.
“Town Centres remain a priority for local authorities across the North West including the Greater Manchester Mayor’s Town Centre Challenge and many local authorities have submitted bids to the Government’s Future High Street Fund.
“Collaboration between the public and the private sector to respond to the challenges and harness the opportunities should result in the further revitalisation of our town centres. The presence of Leeds, Manchester and Liverpool in the top 30 index is a clear sign this process of evolution is occurring very effectively on the High Streets of the North.”
