Keep Calm and Carry On (Sustainably)
The last 12 months has brought the fragility of businesses we once thought as bellwethers of our high streets sharply into focus. For the UK property industry, Company Voluntary Arrangements have become as welcome as Banquo’s ghost and the rising tide has left many landlords searching for legal redress or selling out of retail / leisure property altogether.
While it is easy to point the finger of blame towards inefficient occupiers, greedy landlords or opportunistic accountants, to do so focusses on the symptoms rather than the cause. There has been a structural change in the way consumers interact with physical places and FSP’s Virtual High Street model suggests a return to the depths of the financial crisis within 3 to five years, unless rising costs and declining footfall can be reversed.
Many in the UK property industry talk about mixed use environments and experiential destinations as solutions to the high street’s woes. Others suggest changing taxation or creating empowered bodies to provide best practice guides and impose cookie-cut solutions. Unless physical places are profitable for occupiers however, FSP believes these solutions are just as likely to fail. If we are to truly address the challenge, we need to stop talking about concepts which can only work in a handful of places and focus as a united industry on actions that will drive occupier profits across the country.
Despite the media-fuelled gloom, there are many examples of physical assets which are vibrant, growing in popularity with consumers and sought after by occupiers. While these may vary in scale, format and purpose, they are typically managed by ‘entrepreneurs’ who focus on building strong partnerships with occupiers, co-ordinate marketing, training and intelligence resources, provide engaging retail, leisure and cultural offers (supported by first class customer service), understand occupier business models and deliver improvements which drive footfall, not just rents.
Working with these assets gives FSP confidence that there is a successful future for town centres, property investment and effective asset management. Those who truly understand occupier profitability will succeed by taking appropriate actions which deliver sustainable growth. Those who do not understand occupier profitability should not be surprised by continued consumer rejection, high vacancy rates and declines in asset value.
FSP exists to help investors make the most appropriate, sustainable property decisions. We will be taking that philosophy forward as we integrate with our sister company, Pragma, next month. If you haven’t spoken to us for a while, ask yourself what kind of future you’re working towards, then give us a call.