There's a bloke called Neil who occasionally pops into the NTI Newsroom to tell us about his 74 years in the business amidst eye-rolling and eyebrow-raising, and last week he shared a gripping story about his first job at the Odeon in Norwich when he backed down the aisle with bottles of Kia-Ora and bags of nuts, piped in by the theme tune of the very first Star Wars movie. The Odeon was the jewel in the crown of jagged concrete slabs of the Anglia Shopping Centre, one of many benefitting from Margaret Thatcher's relaxation of the planning laws in the 1980s. This centre was later denigrated to the status of ghetto when shoppers deserted its walkways and has lately become a graffitied mausoleum, long starved of any meaningful retail activity. If the writing was on the wall for this failed 'shopping mall' experiment it was joined by such vaunted aerosolled statements as 'Bonnie Rocks' and 'Sam4Lucy' sprayed on the beton walls. But there is motive behind the madness of such planning departures; business rates raised £31bn for the Treasury in 2019 and the survival of the high street and out-of town shopping malls, although often at odds with one another, has to be a central pillar of Government re-building policy over the next five years.
Those of us in the restructuring sector who are not directly involved with the Administration of Intu or the slow and painful dismantling of the fashion retail industry on the high street look on in fascination at the roster of brands falling under the knives of Administrators and Supervisors at the moment. British shopping centres are far from immune to changes in shopping patterns and it will be a long time before they can be vaccinated against Coronavirus. Other than the 107,000 jobs in 17 shopping centres owned by Intu, the Bullring centre in Birmingham collected just 16% of the rent it was due for the last quarter and the Castlegate Centre in Stockton is being demolished and replaced by a riverside park. On the other side of the retail street there is hope that Westfield's of London and Meadowhall in Sheffield can survive the pandemic, as brands need high-end exposure and the glitz and spangled lure of well-managed shopping malls provide that.
The Sunday Times this week reported that Jeffreys analyst Mike Prew estimates rents and lettable spaces in notable shopping centres will drop by 30%, but as they are either in cities or at accessible out-of-town sites, they will find it easier to attract office developers or housebuilders to repurpose vacant shops. I don't know about you, but I cannot imagine living between a Hotel Chocolat and an erstwhile Bella Italia in an organically changing shopping mall outside Sunderland, but then again I don't want to live in a recycled multi-storey carpark either.
Some of the less glamorous malls around the UK are anchored by discount supermarkets and scattered with chemists, charity shops and phone repairers. The decor is cheerless but the services they provide are not easily available online. As part of the Covid-19 recovery plan ministers announced last week that, by September, property owners will be allowed to convert a shop into a cafe or office without planning permission or local authority approval. Poorly performing retail parks near cities could become Boohoo, Instacart or Amazon distribution centres. The Government recognises the need to remove barriers to growth and let things happen. Turnover rents, repurposed department stores and flexible leases will be part of an extensive 'new normal', we just have to go with it and persuade our clients it is in their best interests to do so too.