From Bricks to Clicks

Fourteen shop units close each week! This sounds scandalous and horrific but it is a tale that will run and run and nothing will really change. Since the development of the first Arndale Centre we have lived through the slow, gradual, eroding power of the High Street.

The boom of easy access, car ownership, seven-day trading, relaxation of out of town planning, and the major chains and supermarkets’ growing power have all been nails in the High Street’s coffin.

My question is, why are we now paranoid about the terminally ill patient? Have we only just woken up to what has been inevitable for decades?

The biggest challenge for the High Street and our Town Centres is the disparate ownership of the buildings, which means there is a selfish approach to solving an individual investment problem, such as a vacancy, rather than a coordinated, strategic resolution.

The solution to harnessing different mind sets and investment strategies lies in knowing how property investment works and how the ownership of our towns and cities is made up.

Investors fall broadly into four categories: pension funds and investment companies which are long-term owners of units and blocks; developers which want to acquire, build, redevelop, sell to investors and move on; traders who will buy and sell units within a relatively short timescale, usually three years, and hope to add value to make a profit; and the owner-occupiers who own the building and run the retail operation.

Within a town or city our High Streets will typically have a variety of owners with one party owning one building, or a chunk of buildings, and others doing the same. To coordinate High Street owners’ interests is asking a lot of the investors, traders and developers – it is virtually impossible!

In comparison, town Centre managers have been with us since the 1980’s and were introduced to start turning the tide and aligning varied interests. The past three decades have shown a change in townscapes’ usage as technology evolves and we inevitably slide from bricks to clicks.

We need to open our minds and let the High Street continue its regression, embrace the changes that come and allow flexibility for the property experts to make money by keeping their assets alive… although there will still be pain along the way.

Design for life and management

Any homebuilder or developer would put together a new development design team and automatically include architects and lawyers but why not management specialists? The architects will design a good building but do not have to manage it. The lawyers will draft the lease, but will not necessarily get the service charge provisions right because, again, they do not have to manage the building!

So what can managers bring to the party? Their years of skill and service in knowing how the building will run; spot the areas that cannot be cleaned; spot the gaps in the leases that will cause issues at a Leasehold Valuation Tribunal (LVT) at a later date; and make sure the space is serviceable and manageable.

Historically the developer wants the manager to give his or her services for free and merely compile a service charge budget and then the estate agents will come along and want that slashed to make it easier to sell the apartments. This is instead of utilising the manager’s skills in upselling their services, management and making the running of the building a virtue of the added value.

A truly enlightened developer will realise the benefit and the need of bringing the manager into the heart of the design team as early as possible. This is where they can gain value in the apartments and gain value in their sales. Along with making sure the running of the building can and will be smooth following completion.

Is this a pipe dream? No, I believe times are changing and the realism will come to the fore. Chainbow is positioning itself to lead this changing added value service.