Context is king… You may have heard of the broken window theory, where visible signs of crime are believed to encourage further disorder, but now there’s the “closed shutter” theory. Retail units are no longer just literal shopfronts, they’re a bellwether for the wider success of a town or city. Discussions at Revo in Manchester this week were not solely about who occupies certain sites or how they’re trading, but what the state of a location’s retail as a whole meant for the wider area. Thinking about the sociological dynamics, about why and how people use spaces, spend their money, and the power of communities, formed part of these musings. Topics this large are too big for one sector to deal with on its own, so retail property professionals are working across specialisms, with retail agents talking to residential developers, transport specialists, and local authorities about what it all means.
With Britain’s deadline for leaving the EU only six months away, of course Brexit was mentioned copiously during the conference, both from the lectern, in panel discussions, and within the various coffee areas across the hall. After the initial dip following the referendum result in 2016, property is largely thought to have recovered, and while there are fears of another pre-deadline wobble, that was attributed more to the impact of uncertainty than any fears over the country being laden by any unreasonable demands on exit. Revo attendees were adopting a typically British, ‘keep calm and carry on’ strategy, and many had retracted from their previously entrenched ‘stop Brexit at any cost’ positions. “This dithering is worse than just leaving and getting on with it,” one delegate told Place.
Local authority involvement in the regeneration of struggling town centres, and therefore retail, has increased in the past year, with many buying ailing shopping centres, or backing the construction of new ones. This topic was very much under the spotlight, with the conference organisers themselves even revealing a Revo Roadmap, to guide councils as they take over the management of retail assets. Concern that council involvement was displacing private sector investment appears to have dissipated, with the focus more on how the interventionist approach in towns where private sector money daren’t tread could be shepherded to success. One answer was paying for the best private sector advisors, naturally.
With the very nature of what a retail space is changing dramatically, “flexibility” was a key word at Revo, and an appreciation that occupiers weren’t just downscaling, many were dramatically upscaling, as ‘retail space’ was as likely to mean a 200,000 sq ft warehouse as a 4,000 sq ft high street unit. While the move from bricks to clicks has dominated the market over the past few years as retailers turned to online sales, the roles are also reversing, as e-commerce giants look at opening small, experiential shops with the expectation customers will buy online later. Retail agents need to be more tech-savvy than ever, while also having a handle on movements in the big shed market.
The retail sector has always been on the front foot when it comes to tech, and drone demonstrations and VR featured frequently on the Revo conference floor. How tech as seeped into all aspects of our lives was obvious, invading the retail conference to such an extent at times it was difficult to work out what service an exhibiting company actually provided. A particularly high resolution digital screen suggested an advertiser, but turned out to be agent, while a racing game was thought to be for a company involved in shopping centre activation, but instead was being used as a visual metaphor for the business’s use of consumer data.
Unsurprisingly, unlike previous years Revo was light on news of major transactions such as shopping centres changing hands. The retail market being what it is, one investor said valuing a shopping centre would be like “pinning a tail on a donkey”. This is not a time to sell an asset unless you really have to, so there’s an expectation that more distressed assets may be hitting the market in the coming months as the impact of the various administrations starts to bite in secondary locations. Instead of acquiring, shopping centre owners are increasingly overhauling space they already have in order to diversify their offering and keep up with the F&B trends; think Trafford Centre’s Barton Square, Arndale’s Halle Place, and Peel’s Lowry Outlet.
It’s been bad news for many retailers in 2018, but what occupiers remain on the acquisition drive? Coffee shops and barber shops are apparently a safe bet for landlords on the look out for tenants. The UK’s thirst for coffee seems insatiable, though expansion at the chain end is slowing; Caffe Nero has pressed pause on its 2019 growth plans, Costa has drawn a line under any more High Street units, in order to focus on establishing more Drive Thrus. It’s the time for local independents, and not just in the creative quarters, as more corporate locations tap into their occupiers’ increasingly hipster taste in coffee. Pot Kettle Black’s imminent opening on the ground floor of No1 Spinningfields is one example, expect there to be more.
Meanwhile, on the leisure side, it’s ‘competitive socialising’ which is the growing trend, with the retail market discussing expansions such as Junkyard Golf taking 16,000 sq ft in Liverpool One, the continued popularity of axe-throwing Whistle Punks, and darts bar Flight Club imminently set to open in the former Burger & Lobster unit on Manchester’s King Street. It’s no longer enough to catch up over a pint, you have to be putting life and limb on the line as well.
If “competitive socialising” felt like a buzzword too far, think again. Rounding off the first day of the conference was a rousing talk from futurologist Howard Saunders who gave his tech-centric predictions for the future of the sector. Your phone is now God, according to Saunders, but if you can manage to tear yourself away from the screen, get involved with the latest dining trend: sophisto-casual. Think foie gras burgers, while sitting on hay in a field. I think I’ll pass, thanks.