The British high street is going through a period of incredibly dynamic change. But it need not be all doom and gloom, because diversification could lead to reinvigoration of our town and city centres – a shift in which PropTech will play a pivotal role. For instance, an MRI survey of chief executives, directors and top managers in the property sector revealed 72% see the development of residential properties in former retail premises giving the British high street a new lease of life.
It is a change that’s badly needed. According to research by PwC and the Local Data company, the retail slump hit record levels in the first half of 2019 with a net decline of 1,234 chain stores – an average of 16 stores closed each day – on Britain’s top 500 high streets. With changing consumer habits, new technologies and the rising business costs continuing to hit retailers, a growing number of real estate investors and landlords are evolving their strategic outlook to look at how multiple asset types and mixed developments can deliver success.
At MRI we are seeing roughly three-quarters of major retail investors now looking at diversifying developments to feature residential and leisure space, as well as more traditional commercial components. This growing trend is demonstrated by major players such as Intu and Redevco announcing moves into the residential sector within the last year. The problems posed by retailer closures and a chronic lack of new housing are coming together to create a solution for both, with the MRI research showing that 82% of the senior property professionals surveyed see mixed use developments with a strong housing component as a lucrative opportunity – and it could ultimately lead to a healthier high street.
More residential property on the high street then opens opportunities for leisure, hospitality and other related projects such as health clubs, specialty cafes, entertainment venues and other non-retail businesses. We’ve seen recently, for instance, that gyms are one of the few types of business growing in city centres. Indeed, the future of high streets will be areas where people are able to live, work and play – changing the way companies that own, develop and rent out those spaces operate. In order to gain a competitive edge in this changing marketplace and identify suitable new opportunities quickly, they will need to adopt a data-driven approach supported by technologies that enable them to manage increasingly complex property portfolios.
The key will be to employ technology that equips businesses to gain actionable insight into their holdings and operations, helping inform business strategies and activities. We can see the growing importance of property technology in guiding this transition from the results of the MRI survey, with half of the respondents seeing it as critical to growing their business, boosting productivity and tackling regulatory challenges. The research also revealed that the overall uptake of PropTech in the UK is strong, with two thirds of the companies surveyed already adopting a solution.
As high streets evolve into more complex and rounded communities, owners, developers and property managers will need digital tools that allow them to engage with residents, commercial occupiers and stakeholders in a more complete, in-depth and consistent way than they ever have before. Taking this more customer-centric approach will require specialist technology such as self-service online portals for tenants of all types, and even maintenance teams and contractors. Portals enable access to data, the ability to share important information with residents and automated business processes – from managing payments and simple enquiries to handling amenity bookings and ensuring maintenance requests are fulfilled. The result is community collaboration that will suit these mixed developments.
Investors in the real estate along the UK’s high streets need to equip themselves to manage the shift to an altered mix of occupiers and new business models. Investing in technology to manage property assets, as well as changing customer relationships, is quickly becoming essential for businesses to leverage the data and insight they need to take full advantage of the growing opportunity to reshape Britain’s high streets.
Colin O’Reilly, EMEA Sales Director at MRI Software