Landlords must take share of High Street pain, says BID boss Jeff Allen
IT is no secret that shopping is in crisis. Retailers have called in administrators. Major names have disappeared – such as Best Buy and Comet. It is a safe bet that more will go with the approach of the next quarter day when rents are due.
A walk around Nottingham's city centre reveals that, while it might be surviving better than many, it is frayed at the edges. Empty shops account for 18 per cent of space.
Many units in Broadmarsh are empty or let on licence while the owners, Capital Shopping centres, decide what to do.
For more than ten years, a refurbishment was promised by previous owners Westfield who pulled out in November 2011.
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Everyone agrees that it is a disgrace for a city that was once among the top five shopping centres outside London.
Shopping may be in crisis because there is less money going round.
But people are also shopping online more and do not need to visit the city centre.
What is the role of a city centre – not just Nottingham but almost anywhere in the world – as they contract for whatever reason – on-line competition, declining spending power?
That is an issue to be explored at a later date.
In the meantime, Mary Portas, a shopping guru, has been advising the Government on how to turn around town centres and 27 have been selected for help.
Nottingham is not one of them but it is not being complacent. It set up a Retail Bid to organise initiatives to bring shoppers to the city and enhance their experience.
Bid chairman Jeff Allen has a personal stake in Nottingham's success. A chartered accountant, he owns Castle Sound and Vision.
Last month, the Retail Bid joined forces with the Leisure Bid, set up initially to promote clubs, pubs, bars and restaurants, to form the Nottingham Bid.
The joint Bid has much on its plate. There is Broadmarsh for starters, a thorn in the side of the city.
Mr Allen hopes to influence the outcome.
Members of the Bid pay a levy bringing in £850,000 for fine tuning how the city centre works for its "customers".
Last year, it commissioned a study on city centre parking after the council whacked up charges which were particularly painful for those businesses engaged in the evening economy such as wine bars, restaurants and bars.
People deserted en masse for the suburbs, such as West Bridgford.
Mr Allen says: "Of course, Broadmarsh is a challenge. It has to be the right size.
"Everyone is going on about an excess of retail premises in the UK. The last thing we want to do is build a huge shopping centre there.
"We need to be looking at quality, how Broadmarsh links with the Victoria Centre, and how the whole shopping offer in Nottingham is presented."
Capital Shopping Centres controls a significant percentage of the city centre retail space following its acquisition of the 450,000 sq ft Broadmarsh.
"The big issue is sorting out Broadmarsh," says Mr Allen. "The Bid can't do that but we can lobby, help, influence, but ultimately it is something for the city council and CSC.
"Now they own both shopping centres, the last thing they need is increasing retail space so it adversely affects the pedestrian link between the two.
"We need a cohesive shopping experience.
"It has to be a combination of shopping centres and on-street shopping. There is an appetite among people to wander from shop to shop along a street.
"In theory, we should have the best of all possible worlds, shopping centres of a moderate size connected to shopping streets so that people coming to Nottingham have the best of both experiences."
The desirability of Nottingham as a shopping city is reflected in the size, quality and expense of the new Hugo Boss store on Bridlesmith Gate, thought to be worth £1.5m.
Mr Allen explains that the Bid works on a tactical basis, day to day, to attract people to the city.
For instance, it will stage this year's spring fashion event being staged at the end of April in the Old Market Square.
"It will be 48 hours of fashion. Fashion stores and other retailers will be exhibiting."
It is a positive way of getting Nottingham talked about for the right reasons, says Mr Allen.
Nottingham's High Street is made up largely of multiples.
High rents limit the number of independent retailers, those shops which distinguish Nottingham from other towns and cities. Nottingham needs more.
Upward only rent reviews don't help. Mr Allen describes them as archaic, harmful leases which are punitive to tenants.
"Landlords are going to have to bite the bullet and accept the rental value of their portfolio is a lot less than landlords thought it was five or ten years ago. Landlords are not sharing the pain at all."
The internet also has an impact on footfall.
"It is always worth re-stating that the impact of the internet has not been that it has taken away a huge proportion of the business going through the retail stores," says Mr Allen.
"The impact has been the price comparison which has eroded retail margins which means that retailers are being squeezed from both sides.
"They are locked into medium to long-term leases with upward only rent reviews while their margins are being squeezed so they are taking the pain. HMV has gone under, Blockbusters has gone under. Retailers are struggling to survive.
"Margins in electrical goods, for instance, have been hit by the internet."
It is now almost impossible to buy CDs except from specialists such as Classical CD in Goose Gate.
Mr Allen argues that landlords and property companies must share the pain as the High Street re-structures. Only then can there be a renaissance of town and city centres.
"We have to look more imaginatively at what we do with city centres and that does have an impact," he stresses.
"We have online shopping and that has an impact.
"It is similar to buying through a catalogue, selecting five items and sending four back.
"In my view, most people given a choice would prefer to shop in a store. They want to see, they want to touch."
Is it part of the Bids responsibilities to help decide what the optimum size for Nottingham's city centre will be in the short to medium term?
Does it need to shrink to be actively managed, to shed empty shops, finding other uses for them?
Mr Allen agrees the fringes are looking tatty and it extends into the suburbs. Overall, the vacancy rate is more than 30 per cent, the city centre nearer 17 per cent if the Broadmarsh centre is ignored.
Mr Allen uses as an example an empty shop on the periphery of the city centre.
"It is a unit advertised at an annual rental of £32,000. No one appears interested. If the rent was £10,000pa, you would probably have a queue trailing round the block desperate to take the unit at that sort of price. Clearly the rent is between the two figures.
"What we are not seeing is that re-adjustment in public of rental values. Yes, there are deals being done in private."
He refers to a deal where a rent of £110,000 was compromised at £55,000 – but in private.
Mr Allen continues: "The property boys want to keep those deals quiet. They are trying to sustain the illusion that everything is fine while at the same time cutting the deals to get the income in.
"Clearly, once you admit there is an issue with rental values, the whole portfolio devalues."
Owners of empty buildings will also be paying rates unless they are listed.
Mr Allen would like to see a stick and carrot approach – for instance, a local authority approved rates holiday if a property is let out within a specified period.
"This means you have to be creative to let the property out quickly," he adds.
It also requires government legislation.
What happens to empty buildings and shops in the long term has to be explored – and the solution has to be creative.