Mary Portas Is A Woman On A Mission…

…To save our High Street Retailers. The acclaimed retail guru was appointed by the government to undertake a review of High Streets in Britain, in May – the report has recently been released and seems ever more poignant as the Festive Season fails to provide the capital ‘boost’ that is usually expected. What is Mary Portas planning to do about it? How has the industry responded, and what does this mean for the Commercial Property Sector?

Reports show that although footfall on the High Street has remained relatively unaffected, the cold, hard cash that Christmas Shoppers are parting with, this December, is the lowest it has been in years. With High Street Lingerie giants La Senza currently going under a financial “reconstruction”, things aren’t looking too rosy for a lot of other High Street retailers, either. Is their trading trouble a sign of things to come?

Mary Portas has published her 28 recommendations for, what has been received as, a radical strategy plan. Is she the Rebel Hero the retailers have been waiting for? Her proposals have certainly sent ripples through the industry, and evoked a mixed response. The report focuses on solutions for a High Street that is deemed to be in crisis, and I have picked out what I consider to be the more interesting and provocative proposals. Proposal Number 1 Portas calls for banks to be made to sell High Street assets that come into their ownership, if they neglect to manage them properly – doesn’t sound unreasonable does it? But, exactly how this would be put into action is not explained, and would also be met with some resistance. Is Portas being unrealistic in what she intends to gain from the banks and Landlords? Peter Drummond, president of the British Council of Shopping Centres, 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.” Once these distressed assets are on the market, however, this provides opportunities for new business, and expanding business, to rescue such crisis properties (for low prices) and begin to re-build the High Street – a perspective that neither Portas nor the Banks seem to have considered. An ‘out with the old, in with the new’ approach to these distressed assets could be considered a last resort to restoring the Retail Sector to its former glory – after all, change is inevitable, and progressive change is more economically promising than regressive change.

Proposal 2 Portas suggests a further roll-out of Business Improvement Districts (BIDS), and suggests they are reconstructed to make organisations more “powerful and structured” to create a new form of BID, which Portas has dubbed “The Super-BID”. These would call for more local authorities to be given more power to bring empty shops back into use. We contacted Sylvia Oates, the Cheif Executive of We Are Nottingham,  a Business Improvement District for licensed venues in Nottingham city centre. Commenting on the Mary Portas review, Sylvia said: “I’m pleased to see BIDs being included in such a high profile report. This provides recognition of the importance of involving local businesses with the future of their own trading environments. The fact that Mary sees BIDS as the perfect vehicle for this is hugely gratifying. BIDs are a proven success – all but one that’s gone through a renewal process, following an initial five-year term, has been voted back in for a second phase. The format has worked here in Nottingham and it’s worked in many other cities up and down the country.”  BIDS seemt o be a proven success, getting result left, right and centre -it looks like Portas is really onto something here! Oates concludes:  “I would certainly be interested in seeing Mary’s proposal for a ‘Super BID’ in more detail and finding out how this can be executed.” However, Jonathan Riley, a partner at law firm Pinsent Masons, warns: “Portas’ renewed emphasis on targeted 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 numbers 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.” Hmmm. It doesn’t exactly sound like they are on board, does it? Does this pave the way for private landlords and investors to snap up these properties? If neither side seem to offer a perfect solution, and they refuse to agree, we may see a state of Limbo for empty Commercial Property for a while to come.

Proposal 3 Should Secretary of State have “exceptional sign off” for all new out-of-town developments? Mary Portas certainly thinks they should, but it is not an idea that is likely to be popular in many parts of the industry. Portas says “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.” Support for small business and local entrepreneurs! Hurrah! Here at Exeid, we are supportive of new business and creative visionaries – if the industry isn’t moving forward, then it can reach a state of stagnancy – we like to get excited by new developments! Surely Portas’ proposal opens up the world of Commercial Property to those who previously wouldn’t be given a look in, given today’s climate? Sounds like progression to us! If the existing, floundering retail occupiers can be rescued by Portas’ proposals, then the high Street can move into a state of recovery, but if they are simply ‘too far gone’, or a drain on public and private capital, then this proposal provides a promising future for the space, as well as local business. 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”

It is difficult to call, and it will be interesting to see how this proposal is addressed in the Government’s response, which is due to be published in spring.  

  Proposal 4 Portas’ 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. 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., says  John Shurder, head rater for property consultancy Gerald Eve. Considering her this proposal, it is easy to wonder where she thinks this money is coming from, to bail out those suffering retailers on occupancy costs. Are her ideas in this area simply Pipe Dreams? Is it simply too unrealistic to expect someone else to pick up the occupancy costs for a retailer who promises a less that glorious comeback? Or should we be doing everything in our power to stop the Retail ship from sinking? 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. Her plans to bail out the High Street retailers seem expensive, and sometimes unrealistic, but are these the necessary steps to be taken? Or should we let these retailers sell up and allow opportunities for new business and local entrepreneurs?

I’m going to wait until the Government publish their response before picking teams, but for now I think Mary Portas has ruffled a few feathers in the right areas – getting people to REALLY think about how best to utilise High Street Property Space!