Solving the problem of vacant high street units - part 1: the causes
In the first of a two-part series, Natasha KERR, who has joined Remarkable City over the summer, is looking at what is behind the rise in vacant units in town centres, which are a blight on the high street. In part two, she will look at what different cities and councils are doing to address this issue.
Remarkable City is a finalist in the Mayor’s Resilience Fund and has been working with the Mayor of London, Nesta and the London Borough of Ealing as part of the Activating High Streets Challenge.
We are designing a tool to address the problem of vacant units that will provide a number of different users with the information they need to prioritise sites and act and we wanted to take this opportunity to look at what is behind the rise in vacancies.
What are the reasons behind the increase in empty units?
The number of vacant units on high streets has been increasing for a while, however, recently the issue has become more severe. It is estimated that, following the Coronavirus lockdown, around one in seven shops are empty so we looked into the reasons behind this.
Natasha has identified three drivers:
The coronavirus pandemic. Though vacancies began increasing years ago, the issue was undoubtedly accelerated due to the coronavirus pandemic which has forced people to remain inside and retailers to close during lockdowns. Due to these closures, some retailers have been unable to trade as normal for well over a year and this has had disastrous effects for businesses, especially those who were already facing difficulties. Footfall has also decreased significantly due to these measures and even during a period of reopening in August 2020, there were nearly 40% fewer visitors to high streets compared to the following year despite efforts by the government to encourage visits to shops and restaurants. This is due in part to concern regarding visiting busy areas due to the virus. As a result, vacancy rates have risen to 14.1% in the last year and this has had devastating effects for high streets and the retail industry. Vacant spaces also have the knock-on effect of making high streets look unappealing to shoppers and deterring visitors, further decreasing footfall and setting in motion a vicious cycle, reducing visits to nearby retailers.
Increase in online shopping. The rise in online shopping has been buoyed by the pandemic, however, the number of people choosing to shop online pre-Covid was already increasing. With more online shops available and more consumers choosing to shop in this way, high street shops are becoming less of a necessity in people’s daily lives and it is difficult for them to compete with solely online brands who do not have the added expenses of physical stores. Since Covid the percentage of sales carried out online as a percentage of total sales reached as high as 36.3% in January but this figure was already at 21.4% at the end of 2019 and the growth of online retail has been consistent for years. Additionally, especially since the pandemic, many more people have chosen to do their grocery shopping online and as many as 77% of people did at least some food shopping online in 2020, according to Waitrose, compared to 61% in 2019. Thanks to this, as much as 40% of retail floor space has become surplus as online shopping has decreased the requirements for physical retail space.
Landlords expectations on rent. Another problem which began pre-Covid is the issue of high rents meaning that retailers cannot afford to remain on the high street. This was the case for a card retailer based in Bath, named Mayther, which struggled to remain open after its 25 years on the high street and eventually closed due to being unable to afford the rent. There are several reasons why this is the case and why businesses, especially small scale, independent retailers are especially affected by these high rent prices including the fact that there is a clear mismatch between retail rent prices and the prices which can be afforded by smaller businesses. Especially in the context of the pandemic, in which sales have been very low across the whole year due to lockdowns, businesses and retailers such as these cannot afford to pay their rent and that is why, in the summer of last year, many were unable to. In one week in June 2020, for example, only 14% of rent was paid by retailers and this demonstrates the inability of businesses to reconcile high rent prices and low sales due to Covid. Therefore, in the current climate, these businesses are unable to survive and the spaces are left empty. Whilst it will be seen as an easy solution, converting retail space into residential space would impact on the overall town centre offer and serve to decrease the number of people visiting high streets and lower footfall. As well as the potential economic disadvantages, there is a concern that turning empty shops into houses or flats will lead to low quality living space which will lack privacy, be too cramped and overheat in hot months.
Natasha Kerr, Remarkable City.
16th June 2021.
Watch out for Part 2 of this series coming next week where Natasha looks at how councils are trying out different approaches to tackle this major issue for the UK.