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East Midlands Chamber News

Analysing the future of East Midlands town and city centres as business leaders urge 'brave and radical' thinking

In August, only 17% of workers had returned to city centres since lockdown began, according to mobile phone data analysed by the Centre for Cities. While no one quite knows what the future holds for these traditional hubs of commerce and activity in a post-Covid world, the one thing many people do agree on is they will never look quite the same as demand for retail and office space declines. Dan Robinson reports.

 

“If you even mention retail now as part of the town or city centre, you’re about 20 light years behind.”

Ian Ferguson is unequivocal in his opinion – the future of the high street is already a redundant topic.

 “Even pre-Covid, it was clearly recognised that retail wasn’t the main driver to town and city centres,” he adds. “Analysts are saying we moved five years in the space of three months in terms of trends, and towns and city centres have got to adjust rapidly.

“There’s significant change and, if landlords still think they can apply the same rental formulas they had pre-Covid, they’re living in cloud cuckoo land.

“So the whole discussion has to be about the use of town and city centres going forward, in terms of what the make-up is both commercially and the way people use them for living, working and in leisure time.”

The high street’s bleak future was one of the main talking points of 2019 in business, when chain after chain went bust and tens of thousands of jobs were lost. No one seems to be under any illusion now that it’s even worth throwing a life jacket.

In Nottingham, there’s a huge concrete reminder of the impending death of bricks and mortar retail in the half-demolished Broadmarsh Centre, which was left in such a state due to the collapse of shopping centre operator intu midway through a mammoth rebuilding job.

Work stopped in June and the city council is yet to confirm its plans for progressing the dormant site, but Ian – a consultant for business improvement districts (BIDs) as director of Derby-based Partnerships for Better Business Ltd (pfbb UK) – believes it could do worse than look to Huddersfield, of all places, for inspiration.

Kirklees Council is preparing to tear down its 50-year-old Piazza Centre shopping complex and create a new park dubbed the “cultural heart” of the town for arts and leisure. In Sheffield, meanwhile, main roads in the city centre that were once straddled by shops are being dug up and replaced with flower beds.

“There’s a requirement to rationalise retail in city centres,” says Ian. “Cities like Nottingham should have been thinking radically anyway, but the pandemic has exacerbated the shifts that were happening.”

What makes a 'strong' city centre?

Never truer than in online shopping, which accounted for 32.8% of all retail spend in May – by comparison, it had increased its share by a single percentage point to 19.2% in the 12 months to September 2019 – and there’s expectations this could rise to half in three years.

The Centre for Cities research unit had already identified, in 2017, how city centres that were less dependent on retail and had a greater proportion of office space were far stronger economically than those with a high amount of retail.


Read this feature and more in the October 2020 edition of Business Network here


It said a “weak” city centre had, on average, 43% retail and 23% office – with the remainder consisting of leisure and industrial space – compared to 18% retail and 62% office in “strong” locations.

Colin Wilde, managing director of Castle Rock Brewery, which runs 22 pubs across towns and cities including Nottingham and Derby, feels this mix is crucial to attracting visitors.

“With online shopping, people don’t often need to go out to buy a pair of shoes anymore, but they might go out if they want to turn it into an experience. So instead they might go out to buy some shoes, have a wander around, and then go for lunch.”

But he admits the hit to city centres from coronavirus, and the resulting changes to working and shopping habits, could end their role as the hub they’ve been since medieval times.

He adds: “Where people live is where we will need to have pubs, rather than where they work, so there’s strong arguments now for putting them in suburban areas.”

The lack of willing from office workers to return to the daily commute – only 17% had done so in August, according to the Centre for Cities – is reflected by many large firms refusing to make employees go back full time.

The impact on the office sector is stark, with the Royal Institution of Chartered Surveyors’ UK commercial property survey for Q2 2020 finding demand for office space in the East Midlands fell by 68%, while 93% predicted companies will scale back their space requirements over the next two years. The picture was bleakest for retail, with an 85% fall in demand.

Jeff Counsell, managing director of Heanor-based bus operator trentbarton, is concerned what these trends mean for public transport.

He noted how the bus services returning towards pre-Covid levels quickest are those serving the logistics sites in and around East Midlands Airport, with little recovery in morning city centre travel.

“Cities are looking more and more at out-of-town employment, and the town and city centres are going to have to be very much focused on people living in them, as opposed to moving into them to do something,” he says. “That may be transport-independent.

“Finding the missing link for how they attract people into city centres is going to be key. It needs to be a really clean, attractive and pollution-free place to live and relax. Our challenge is that any transport services operating in city centres must be zero-emission – but this comes with a cost.”

This is something many cities, including those in the East Midlands, are working on but it requires incentives to invest – Jeff says zero-emission buses cost twice the amount of diesel models – and policies that prioritise public transport above cars.

He’s also a proponent of the mobility-as-a-service concept, in which different modes of transport – including buses, trams, ride-hailing taxis and pool schemes for cars, scooter and bikes – are integrated into a single interface for users to help join up every element of a journey.

“It’s a great ideal for many people to not have to keep up with the running costs of having a car, but public transport needs to be there for when people need it,” he says. “And it has to be fast, direct, accessible and clean.”

City exodus provides opportunities for town centres - which could soon attract global names in business

“When a man is tired of London, he is tired of life”, goes the famous quote by the writer Samuel Johnson.

Interesting, then, that 103,000 more people left the capital in 2018 than moved in for the first time since the ONS began collecting data six years earlier, as inflated house prices and high crime rates drove people to smaller cities and towns.

Those same areas that had been facing bleak futures pre-Covid due to empty shops, unemployment and under-funded public services could now benefit from former big city-dwellers who no longer need to live near their offices in a “new normal” of remote working.

Pfbb’s Ian Ferguson is working with a BID in a Berkshire town that is home to many multinational corporates, which are now looking to significantly reduce head office space and decant employees into smaller cells of regional offices so skills are found at a localised level instead.

It follows the approach of BT, which in 2018 announced it would leave its London headquarters after 150 years and move staff into 30 regional hubs to save £1.5bn.

Ian feels the days of building a 40,000 sq ft office space and expecting a single occupier to move in are pretty much gone. He expects to see more shared office and mixed-use developments like Manchester’s Circle Square, which combines living, leisure and communal workspace, but in towns rather than just cities. Artisan manufacturers could also fill disused storage space above shops.

“Businesses were already recognising the opportunities for innovative dynamic discussion in shared office spaces,” he says. “Not necessarily just start-ups but well-established companies where they could mix with like-minded people from other business cultures, so this provides opportunities for smaller towns to attract fairly significant global brand names.

“There’s certainly going to be a reduction in commuting long distance as people start to think they can live and work locally, having realised during lockdown the sky is blue and the water is clearer outside cities.”

Modern designs key to keeping staff in offices - but high-rise blocks are the past

Rob Day is sat in a spacious breakout room within a bright, ultra-modern 3,500 sq ft office in a business park on the outskirts of Ashby-de-la-Zouch.

It’s the kind of space you’d expect for an office fit-out specialist like Blueprint Interiors, but also a good example to its clients of why firms should avoid the temptation to have rows and rows of desks that is now causing social distancing issues.

Chairman Rob, who founded the company in 2001, says: “That’s a dynamic we’ve been working against for a few years now because that density of people doesn’t represent how humans behave at work, which is why in our office we don’t need to install plastic screens or map out social distancing.

“The spaces we design look more like hotel foyers and other comfortable leisure environments.”

Rob admits the end could be nigh for high-rise towers like the 800ft One Canada Square, which contains 50 storeys of open-plan offices in Canary Wharf, as he predicts companies in sectors like legal and finance to move out of these spaces.

But while this could lead to huge structural changes in major hub cities like London, Birmingham and Manchester, also affecting the hospitality businesses that serve workers, he doesn’t expect such a dramatic shift in the East Midlands, which is already populated by out-of-town business parks.

“But, ultimately, the use of space is going to change,” he adds. “There’s an assumption that if people are allowed to work from home more, then companies automatically need less space because everyone had their own desk beforehand.

“But having your own desk is quite sub-optimal in terms of how to design a space. I’m sat in a space where I could fit in four desks, but it allows me to do other things. There’s also certain resources in the office that you can’t get while working at home, such as the social aspect, so I’m not sure the dynamic is going to change as rapidly as people think.”

'Brave and radical' decisions are needed to transform cities

Ian Ferguson isn’t sure city and business leaders have contemplated just how fast the coming changes will be.

He believes Derby is on the right track by taking a mixed-use approach with the £200m regeneration of the Becketwell area but wants to see more outside-the-box thinking as consumer spend transitions from material goods to experiences, and quantity to quality.

“There are a lot of people struggling to get their heads around what town and city centres need to do because no-one really knows how many of today’s businesses will still be here in six months’ time,” he adds.

“But it needs a clear direction from leadership, and it needs some brave and radical decisions because we’re not going back to where we were.”


 

Rising footfall at East Midlands Designer Outlet suggest shopping could move out of towns and cities

While city centre retail continues to struggle, the region’s largest out-of-town shopping centre has thrived during the pandemic, according to the man who runs it.

In August, East Midlands Designer Outlet announced three brands – Barbour, Under Armour and Molton Brown – will join the 60-plus stores at the South Normanton mall.

Other brands on site include Levi’s, Nike and Lindt, offering discounts of up to 60% compared to high street prices, and centre manager David Jackson says year-on-year footfall actually increased by about 5% in July and August.

“This suggests to me that outlet shopping absolutely has a place in the future of retail because of the price point,” he adds.

“Before Covid, business rates and rents in city centres were astronomical. Big brands were doing fine – although their margins were never made on the high street so just existed as marketing tools for their e-commerce businesses – but small brands were struggling to keep their spaces.

“The small out-of-town retail parks were seeing footfall reducing pre-Covid because you never really knew what their USP was and had many of the same shops as in city centres – where people could buy something in their lunch hour.

“Now, though, if they’re not working as much in the office, they might want to travel out of town more and outlet shopping has given people a reason to do that because we know our USP.”


 

TTK Confectionery has no regrets over move from high street to wholesale

The day Martin and Jess Barnett decided to close their sweet shops was a sad one – but it resulted in the thriving business they now run today.

The couple, who opened The Treat Kitchen in Nottingham city centre in 2014, before adding branches in Leicester and Derby, decided to change direction after witnessing some of the high street’s struggles first-hand.

They instead focused on TTK Confectionery, the wholesale business that had been set up in 2017, and their products can now be found in more than 10,000 stores worldwide, including a recent UK deal signed with Sainsbury’s.

And while they previously celebrated selling a million individual sweets in-store, TTK now produces a million units – boxes, glass bottles or packets – each year.

“It’s not even comparable to the first business in terms of sales because of the sheer amount of units we’re working with now, so we’re definitely glad with our decision,” says Jess, who predicts a £5m turnover next year after growing 250% annually for the past two years.

A real live wage employer, TTK now has two warehouses near Sneinton Market and 30 staff – compared to about a dozen in the shop – including packers, designers and salespeople. There are seven Nottingham Trent University graduates on the books.

The company sources its sweets from manufacturers and develops products that will be sent to stockists – it dispatched 750 tonnes of stock in 2019 – often themed around certain events or demographics.

Jess says: “It’s opened the door to a more innovative environment and we can be more creative, as well as work with bigger customers and branch out into more general gifting items.

“Some models work better in a retail setting but we tried to diversify our model to survive. You’ve just got to be creative and offer something different – for us, that meant going into wholesale and it’s worked for us so far.”

 

This article features in the October edition of the Chamber's Business Network magazine, which is available to read here.

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