Is the town a palimpsest? Discuss – The Property Chronicle
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Is the town a palimpsest? Discuss

The Professor

Bemoaning the decline of the UK high street is pointless – it’s basic economics that land use changes according to need, and that means flats and cafés in place of shops

For the past ten to fifteen years, commentators and local residents in towns all around the UK have been heard decrying the decline of the high street. I find this disingenuous: I have lost count of the times a large high-street retailer has closed due to lack of profitability and yet an interviewed member of the public, lamenting the loss, admits never having shopped there. That might have a correlation to the closure.

And it isn’t just the large defunct or struggling national retailers that are disappearing; it is also the small, independent traders which simply don’t offer the buying public what they want to buy. I am sorry if I appear to be lacking empathy and sentiment, but one of the first lessons I learned at university was that property or land is normally used for its highest and best use. Obviously, there are exceptions where society has decided that a particular property may have a non-financial worth greater than its monetary worth (for example, religious or heritage buildings) but, in the main, if a particular use of a property doesn’t make money, it will change to a use that does. 

It is simple economics: high streets are changing because we are no longer using them as we once did. Food retailing tends to be concentrated in edge-of-town superstores; clothes are now bought cheaply online; white goods are either online or in retail parks. Retailing has changed, so town centres will change. And, in many cases that is already happening. The retail offer is becoming less, but the reuse of properties as town-centre living with a proliferation of restaurants and coffee shops means the function of the high street is moving into a new decade. 

There is always a lag in transition, of course. Planners, in hopes of artificially resuscitating the vibrancy of town-centre retail, are reluctant to change the planning use 

of retail units. But such an approach does not work: the properties just remain empty. Investors are often greedy and naive, thinking retail rental levels will remain the same or go higher, when the reality is merely that some retailers can still make money on the high street at the right (lower) level of rent. 

So properties remain empty for even longer. Local authorities (and to a lesser extent, central government) want to implement innovative schemes to regenerate the high street, but these don’t work and properties stay vacant. 

If you want high streets to be vibrant, you need to accept the change that the market is dictating. There will be fewer real shops on the high street (though more charity outlets, as they can make money with volunteer workforces), condensed into a smaller CBD. There will be more residential properties, more coffee shops and more restaurants. But all this will happen only if everyone accepts change and embraces it. 

Or – and this is for society to decide – if we really do value the town centre as a retail destination, then we can use fiscal policies to intervene in the market and support the existing offer. That may be done through lower local taxation in the form of rates payable, or it may be via a new tax on the online competition. The government could add a per-item tax on delivery (regardless of it being labelled as free) so that the running costs of online companies are more in line with those of selling from a physical location in town. But that would mean the erosion of the online offer’s price advantage – and I am pretty sure that the locals so vocal on the death of their high street would be equally so about having less money in their wallets. Ultimately, whatever is decided, it is a choice. Markets tend towards efficiency over time; market intervention distorts that trajectory.

The pure capitalist view of ‘let the market sort itself out’ may be at odds with a more caring view of the world that defends the status quo, but in economics that is how the high street has always worked. Once upon a time, in the UK, a town was just a concentration of abodes huddled together for protection and, latterly, worship. Then came the visiting or weekly markets that sprung up in removable or reusable stalls, where bartering was the currency of ownership. Eventually, fixed shops established themselves and towns as we know them today were born. 

The Professor

About Nick French

Nick French

Nick is an experience teacher of valuation for both the profession and universities. Trading as "Real Estate Valuation Theurgy", Nick continues to write papers, presents conference papers and undertakes in-house training for the real estate profession at home and abroad.

Articles by Nick French

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