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. Bristol rose seven places from last year’s report to second in the Index.
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.
Retail locations across the South West fared well, with Exeter in fourth position, Bath in sixth and Cheltenham in 11th place.
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.”
Spencer Wilson, Head of Retail at Cushman & Wakefield’s Bristol office said: “The structural change in UK retailing is happening fast. Bristol being named second in resilience ranking is a real compliment to the strength and diverse economy that has evolved over the last 10 years. Broadmead will change beyond recognition over the coming years, with a reduction in retail provision, an increase in the mix of uses and improvements to the urban landscape. The latter is still a serious impediment to Broadmead’s vitality and attraction.
“The recent acquisition of the Mall Galleries Shopping Centre is part of this repurposing process. Bristol City Council has a very important part to play in the vision for this area and the city centre as a whole as both planning authority and property owner and will need external advice to deliver a clear, viable and attractive urban environment.
Recent additions to the retail landscape in Bristol include, Metro Bank and TK Maxx which have taken the entirety of the former BHS store and fashion retailers, & Other Stories and Bershka taking space in Cabot Circus.
Underperformers
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.
John Percy, Head of Development and Place in Cushman & Wakefield’s UK Retail team, added: “To succeed in the future, town centres need to adapt and that means taking a holistic approach. For town centre stakeholders to deliver a viable masterplan, the public and private sector must work together to understand the needs of those living and working in a town centre’s catchment area. From here, a transparent strategy can be devised, to help encourage local communities to interact more fully with town centres once more. Failure to do this will mean centres struggle as they become less relevant to their local population needs.”