Analysis: How local authorities are stepping in to tackle declining shopping centres

Local authorities acquired more than £6.5 billion of commercial property in the three years to 2019, spending habits that attracted the attention of parliamentary watchdog the National Audit Office (NAO). Its report, published this month, charts the spending patterns and the risks, NAO head Gareth Davies pointing out, “The benefits from this investment must be considered against the potential risks to authorities, particularly given the concentration of this activity and associated borrowing within a relatively small group of authorities.”

The report, Local authority investment in commercial property, finds that 80 per cent of that total spend came from just 49 local authorities, with many big spenders being in the south east of England. Acquisitions were mostly office and retail properties, with £3.1 billion being spent on the former and £2.3 billion on the latter.

The drivers for local authorities to turn property investor are varied, with some having the basic aim of securing rental income to support their delivery of essential services. When it comes to shopping centres, however, the imperative for acquisition is often likely to be town centre regeneration.

Strategies for town centres

Local authorities are having to step in and take the lead in planning, funding and delivering town centre regeneration as high streets and shopping centres fall out of favour with property owners, retailers and shoppers, research by commercial property consultant Lambeth Smith Hampton (LSH) and retail property networking body Revo notes. The long list of local authorities taking this course of action includes Shropshire Council, which bought Shrewsbury’s Darwin, Pride Hill and Riverside shopping centres, Bolton Council which bought the town’s Crompton Place centre in 2018 and Havant Borough Council, in Hampshire, which has acquired the local Meridian centre.

These and many more local authorities are bringing forward their own strategies to drive regeneration, repurposing and revitalisation. “There is no one size that fits all,” stresses Steve Norris, LSH’s national head of planning, development and regeneration. There can, however, be common factors in approach, Norris citing the need for regeneration to have good leadership at a local authority level and cross-party support. He continues: “Councils need to have a well thought out plan, which is more than a masterplan or design-led approach and is commercially driven”.

A strong business case can be important not only for the town centre’s future but also in responding to local concerns as plans are implemented. Shropshire’s acquisition of its three shopping centres attracted negative media attention when the assets’ value dropped by around a fifth in their first year in council ownership. But this is only the first stage in a programme that will see the Darwin centre upgraded as the primary retail destination, vacant units in Pride Hill repurposed and the Riverside site redeveloped. The programme is itself part of a broad-ranging strategy for the town centre, called the Shrewsbury Big Town Plan, which is being brought forward by Shropshire Council, Shrewsbury Town Council and the Shrewsbury Business Improvement District. “Councils like Shropshire can be engaged on a 20, 30 or 40 year strategy. This is what a lot of local authorities should be doing,” says Norris.

The report from the LSH/Revo research, Investing in the future: Can we fix our “broken” town centres? points to potential policy and funding levers that could help drive revival, like town centre enterprise zones. Its ongoing work will look at these further, as well as emerging good practice across the public and private sector.

The research highlights the need to think more creatively about the ingredients that make a successful, diverse and vibrant town centre. For some shopping centres, repurposing may be an option with floorspace being combined for uses such as education, health, library, leisure or market halls. “A diversity of uses can underpin town centres,” says Norris. “They are still community hubs.”

When a centre is clearly failing, however, tough decisions may have to be made. “Contraction has to happen. Some town centres have three shopping centres, which is one – or sometimes two – too many,” says Norris. Location will be key to decisionmaking, he explains. “Most of the bigger retail brands conventionally needed 250 stores in their network, but they now need just 50, so the big regional centres will be home to the bigger retailers. Locations outside the top 50 town centres will struggle to fill two centres.” Inevitably, some ageing centres with poorer quality floorspace may find that their days are numbered, says Norris: “Some are old and not fit for purpose and the only solution may be to start again”.

Advice: Maximising community benefit from retail markets

Retail markets were once seen as outdated parts of the town centre offer, which some councils were prepared to sell off. But there is growing realisation that they can play a renewed role in attracting people to flagging town centres, says Graham Wilson, policy advisor at the National Association of British Market Authorities (NABMA). “Market halls are now being rethought as the focus for their communities, housing a diverse retail and food offer and a range of activities,” says Wilson.

Councils need to accept that their markets will not generate great surpluses to subsidise other activities, as they have in the past, he explains. The benefits from a lively market hall lie in revitalising the town centre and providing a source of affordable goods.

Here are three key points to consider when renewing retail markets.

1. Bring in food, but keep a careful balance of retail offer

Many markets are introducing a street food offer as part of their regeneration strategy, says Martin Blackwell, an independent place management consultant. He points to Norwich market in the centre of the city, which a couple of years ago had a 30 per cent vacancy rate. “It is now full and cooked food sales make an important contribution, offering meals from all over the world,” he says. This includes stalls set aside for people trying their hand for the first time, he points out.

It’s important to ensure that the food is of a high quality, but that it is cheaper than surrounding restaurants and cafes, says Ricky Davies, managing director of Radcliffe Market in Bury, greater Manchester, who has overseen the rebirth of the town’s market. “We don’t allow any microwaves or pre-cooked chips,” he says.

As markets expand their offer, their community role must not be lost, argues Sara Gonzalez, professor of human geography at Leeds University. “Research we’re carrying out for the Economic and Social Research Council (ESRC) shows that local communities feel ownership of their local market,” she says. They still perform an important role, particularly for older people and families, in providing low cost goods in packaging sizes to suit their needs, which are not available in supermarkets. 

Chris Savage, projects manager at the National Market Traders Federation (NMTF) says that the different offers can support each other. The food and other activities can encourage people to spend longer in the market, and buy their everyday goods as well. He points to the refurbishment of Hull Trinity Street Market, where the traditional food hall now includes cooked food stalls selling restaurant style food and drink, including one selling its own beer brewed on the premises. They sit alongside the fresh fruit and vegetable stalls and others selling everyday goods, he points out. 

Another model adopted by some markets is that different markets take place on different days or times. “The street food or retro markets take place in the late afternoon or evening,” says Savage.

There need to be differential rents for the different kinds of stalls, suggests Gonzalez. Street food stalls can afford to pay more. “If all the rents go up, everyday goods stalls could be driven out,” she points out.

2. Promote a wide range of activities

Markets are traditionally spaces where people meet, and a diverse array of activities can encourage that role.

Revamped markets are increasingly including performance spaces, where jazz concerts, film shows and speciality markets can take place, says Savage. These can take place inside the market or in the public spaces around them.

3. Consider new forms of management

NABMA’s Wilson suggests that to perform this wider role, new forms of management could be considered. Markets have traditionally been managed by local authority officers within a separate market department or streets and highways. “They need to work across departments, involving economic development, planning and regeneration to maximise the wider benefits,” he says. He suggests that they should include local universities, pointing to Huddersfield University’s partnership with the town’s Queensgate market: “The Creative Hub at the university puts on exhibitions and displays in stalls and around the market.”

Some councils have created new structures to manage markets, including bringing in social enterprises and community interest companies, says Frances Northrop, director at the New Economics Foundation. “This ensures that any surpluses from the markets get kept in the local community,” she says.

Councillor David Jones, leader of Bury Council, says that, “They went out to the local community to run Radcliffe Market because they wanted to create a partnership with it to revitalise the underused space.” A community benefit society has been set up to manage it. Radcliffe Market’s Davies points out that, “local people can relate better to an organisation outside the council”.