New plans to drive social change on our high streets
Recommendations in new report point to an exciting future for our urban centres, with collaboration, communication and community at its core.
Across the UK, community-led start-ups are struggling to find available, affordable, long-term retail space. At the same time, net zero targets are being diligently pursued by local authorities, and asset owners and multi-site occupiers are doing all they can to implement ESG measures across their operations and property portfolios. Everywhere you look, urban revivalists are striving to identify new ways to deliver a more diverse and climate-resilient retail eco-system and add footfall and vibrancy to failing shopping districts. But the future remains unwritten.
Over the last year, Shoosmiths has been part of a coalition of retailers, local authorities, landlords and socially-trading organisations, as well as Radix think tank, the British Property Federation, charitable trust Power to Change, local government network New Local and the High Streets Task Force, to explore how to drive positive social change in our urban centres.
This group has just published a report, A Platform for Places, which features a set of proposals designed to help bring businesses – and customers – back into our towns and cities. The report’s recommendations are based on bringing to scale successful examples from across the country that are already helping to drive footfall in under-utilised areas, rejuvenating stale retail districts and breathing new life into high streets. In so doing, these template projects are delivering value from which all parts of the retail sector can benefit.
Proposals
Recommendations from the report include the creation of a high street buyout fund to help communities purchase empty high street property, a specific business rates relief for regulated socially-trading organisations, growing the Heritage Development Trust and a consultation process around Community Right to Buy.
These proposals aren’t meant to be a silver bullet for all of the high street’s woes but, in seeking to connect everyone from landlords, major occupiers and local authorities to start-ups, community interest companies and entrepreneurs, these proposals can help to build a platform that will turbocharge a more collaborative, solutions-focused approach that supports everyone.
A central focus for the project has been on placing social value at the heart of future planning, a concept that is now beginning to be seen in more traditional retail occupier leases as part of the wider ESG agenda. As businesses are grappling with sustainability targets, the social impact of their operations is now coming to the fore, and retailers need to start considering how their lease structures can better support their wider ESG commitments, which are becoming increasingly important to their customers.
ESG leases
ESG leases have, to date, focused primarily on the sustainability performance of a particular unit or site but, with social value increasing in importance, we can expect to see lease considerations which integrate community benefits to feature more frequently going forward.
However, the traditional challenge with ESG-leases has always been the issue of cost, and this issue only gets more complicated as we start to consider social impact - where should the cost lie?
Ask retail occupiers and they will say that they are already meeting the costs of their own businesses in achieving their ESG agendas. This could be through employing local people, offering local apprenticeships or offering concessions to businesses from the local area, for example. The landlord’s business is to provide a building for which it will receive a rent. However, if showing their ESG credentials is key to satisfying investors and shareholders, surely the cost should lie with the landlord?
Ask landlords and they will say that they want to conduct their business with a social conscience, and this requires the buy-in of the occupiers that use the property. So, why shouldn’t those occupiers help them to fund initiatives which benefit everyone, such as allocating sections of their centres to new entrant businesses at low or no rent for a set period, investing in green technology and participating in forums to make the world a better place?
Where the landlord needs to comply with legal obligation as regards common facilities, the occupiers seem prepared to meet the costs. However, beyond that, landlords will need to show actual benefit to the occupiers before they can justify passing on the expenditure.
Finding a resolution to this debate may actually be assisted by the exposure to utilities costs felt as a result of the Ukrainian conflict. Green technology was previously seen as having too long a payback period to be worth the capital investment. The ability to be more self-reliant as regards power paired with the ESG agenda may mean that the arithmetic has a different result. But there is still an upfront cost and, at present, it isn’t agreed who should pay for that.
Collaboration, communication and community need to be the starting point.
Summary
At the end of the day, the message from occupiers is cost versus value. If an occupier receives a benefit, it will pay the cost. If not, there will be push-back. For landlords, they need to balance the needs and concerns of different types of occupier that may hold leases of varying lengths and to varying margins, some of which may – and, arguably, should – be socially-trading organisations, but which overall have a manifest benefit to all trading occupiers. As a result, some flexibility is likely to be required to enable landlords to manage effectively and to support a more diverse retail eco-system, from which all benefit.
The recommendations in the Platform for Places report go some way to setting out a path to an exciting future, however, as the initiative has demonstrated, collaboration, communication and community need to be the starting point.
Click here to read more about Shoosmiths’s plans to deliver a high street revival.
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This article was also published in The Retailer, our quarterly online magazine providing thought-leading insights from BRC experts and Associate Members.