Planning matters blog

Broadening Horizons - Retail and Leisure Post-Covid

Daniel Gregg 25 Apr 2023

It has been well documented that the retail and leisure sector in the UK has been through a turbulent period, compounded by Covid-19 and its aftermath. However, what has the impact been upon spending within the sector and what does the future hold?

Spending forecasts sign-post short-term turbulence and a slow recovery

The UK retail and leisure sectors have experienced significant turbulence since the Covid-19 pandemic began in early 2020. The convenience (food grocery) sector benefitted during the lockdowns in 2020 with over 10% growth in expenditure, whilst the comparison goods retail and leisure/hospitality sectors suffered. The average shop vacancy rate in town centres across the country increased from around 12% to almost 15% between 2020 and 2022, with many businesses failing to re-open after the lockdowns.

During 2021/2022, there was a period of readjustment with expenditure growth in the convenience goods sector reversed. The leisure sector recovered strongly with 66% growth in expenditure per head during 2021/22, as people returned to pubs and restaurants to eat and drink and spent less in supermarkets. Growth in the comparison goods retail sector was more modest – although very welcome - at around 6%.

The latest Retail Planner Briefing Note from Experian sets out their forecasts on future changes in retail spending per person. To help illustrate both the impact of the pandemic upon retail spending and Experian’s views on how personal expenditure is likely to change going forward, their recommended growth rates are shown in the figure below.

Source: Experian – February 2023

The latest forecasts suggest a small reduction in expenditure during 2023 across all three sectors with sluggish growth thereafter in 2024 and 2025. With the continued growth in home shopping, the short-term market outlook for the high street will be challenging. Not least given that the above growth rates are before any allowance is made for continued growth in internet shopping, which will take a significant chunk out of the spending actually available to physical shops.

What does this mean for town centres?

These short-term trends are not entirely new but have been exacerbated by recent circumstances. Although the proportion of convenience goods (i.e. food/grocery) retail uses has increased slightly – buoyed by the number of smaller format stores opened by the large national operators - comparison goods retailing in town centres has declined steadily over the past decade. The proportion of town centre shop premises occupied by comparison goods retail outlets has reduced significantly - from over 41% in 2011 to only 28% in 2022. The banking/financial sector also reduced significantly. Conversely, the proportions of food/beverage and other non-retail services grew during this period.

The decline in comparison goods retail outlets has been experienced across all retail sub-sectors, but particularly significant for certain sectors, including clothing/footwear and books/stationery. Experian’s latest expenditure projections suggest that these trends are likely to continue. As indicated above, expenditure growth in the leisure sector is expected to be much lower in the next few years and local authorities will need to continually refine their strategies to seek to avoid, and where necessary, respond to further increases in vacancy rates.

Retail is still very much alive

There will be locational differences with areas with high population growth or existing gaps in provision likely to be most resilient. Some sectors, including discount retail (both food and non-food) are continuing to expand, and it is important that local authorities are able to respond positively to these proposals – directing them to the locations which will best support their town centres. Aside from traditional retail, research from LDC confirms that fast food takeaways, beauty salons, nail salons and barbers were all in the top ten fastest growing categories in 2022, based on net change in units. This is not necessarily something to base a strategy around but certainly helpful to smaller centres around the country, in bringing increased diversity of use and new drivers of footfall.

But town centre strategies cannot stand still

Winners and losers will emerge as centres compete for market share. However, those areas which plan pro-actively to deal with the above challenges have the best chances of success. Town centre strategies should continually be revisited, taking into account changes in consumer demand – the need to reduce reliance upon retail is accepted wisdom but it is not enough to rely on traditional leisure activities (and particularly food and beverage uses) either. A more imaginative approach is therefore essential.

Lichfields has helped a number of authorities develop strategies to deal with the challenges facing their centres. In Stockton-on-Tees, we have secured outline planning permission for the redevelopment of a former shopping centre – acquired by the Council to address a longstanding vacancy problem – to provide a new urban park and mixed use development, connecting the wider town centre with the River Tees. Also on Teesside, and after helping secure £25m Town Deal funding for a package of measures in Redcar, Lichfields obtained permission for a new cultural and leisure hub, along with public events space - providing a year-round attraction with spin-off benefits for the wider town centre.

Any new strategies should be bespoke to each town’s needs, also taking into account market demand. Retail may still be part of the solution, not least where there is latent demand in the discount sector, and local authorities must ensure they have the resources to deal with such proposals. However, the latest forecasts from Experian confirm that it can no longer be the central feature. Leisure will play a part, but a simple glance at the definition of ‘Main town centre uses’ in the NPPF Glossary tells us there is a much wider range of uses which should come into the equation.

This includes offices, hotels and conference facilities, theatres, museums and/or concert calls. Whilst not strictly a main town centre use in planning terms, housing will inevitably play a role in most centres, and outdoor space offers the flexibility to perform a range of functions. Up to date evidence on retail and leisure spending will always be important but local authorities must take a much broader outlook to genuinely support their centres.

Image credit: Jonny Gios via Unsplash

Failing to Plan or Planning to Fail? The State of Local Plan-Making

Simon Coop & Isabella Tidswell 20 Apr 2023

Our January 2023 blog highlighted the economic and social costs of the 33 Local Plans that had been delayed at that time. Since then, the trend for pausing plan-making has shown no signs of slowing down, with at least 10 further local planning authorities having paused work on their emerging plans since, the majority citing the Government’s proposed planning reforms as the reason for doing so. The potential impacts of the delays in plan-making have also recently been picked up in national media coverage including in The Times[1] and The Telegraph[2].

It is important to note that a few local authorities are bucking the trend; in some cases motions to pause plan-making have been defeated. For example, West Berkshire Council recently voted to submit their draft plan to the Planning Inspectorate despite concerns about soundness and the Government’s proposals for planning reform.

Despite some bold outliers pressing on with their plan-making, the overwhelming mood among local planning authorities seems to be a cautious one in terms of proceeding with their emerging plans, and we expect that more authorities will be pressing pause in the coming weeks and months. In some cases where plans are at examination, Inspectors themselves have suggested that authorities pause their work to consider the outcome of the Government’s consultation – for example Solihull and Mole Valley. As we highlighted in our previous blog, there are significant implications for society when LPAs put plan-making on hold, including:

Homes Foregone – we have estimated that we are forgoing c.11,200 homes per year in the absence of ambitious local plan-making (and this is likely to be a conservative estimate);

Economic Costs – the homes foregone figure translates into an estimated combined construction value of £11.09bn, which would support 8,700 direct jobs and 10,700 indirect jobs – and result in £145m of Council Tax per annum when the developments were completed (at today’s rates);

Other Societal Costs – new development, when properly planned for through local plan allocations, provides a whole host of benefits to society including new schools, health centres, green spaces and sports provision. In the absence of new housing, these benefits are not being delivered.

Looking ahead

Amid continuing uncertainty regarding the Government’s proposals for planning reform, this leads us to ask how many more local planning authorities might pause work on their local plans. As a starting point, we have referred to the list maintained by the Planning Inspectorate[3] to establish how many authorities are currently undergoing reviews; as of the latest update on 20 March 2023, 170 authorities are undertaking a review of their Local Plan, although 44 have already paused work.

We have then considered which authorities might be at risk of pausing plan-making; logically this would be those whose housing target might reduce as a result of the amendments to the NPPF. This includes:

London authorities – London currently delivers far less housing than its requirement as calculated by the standard method. Looking forward, NPPF proposals that relate to character could put the brakes on higher density developments, particularly in outer London Boroughs.

Other authorities subject to the 35% uplift – there are 19 other large cities which are subject to a 35% uplift to their Local Housing Need. With reduced scope to densify ‘out of character’ (as in London), no need to review Green Belt, and a weakened expectation for neighbouring authorities to address any unmet need, the impact of the NPPF proposals is that the housing requirement in these areas is likely to be reduced in the future.

Green Belt authorities – under the Government’s proposed NPPF reforms, there will be no requirement to review the Green Belt when preparing new local plans to meet housing need. There will also be less scope to build at high densities and weakened expectation for cross-boundary re-distribution. Consequently, authorities that are significantly constrained by Green Belt (over 50%) are therefore likely to be able to target lower levels of housing delivery.

Other NPPF ‘Footnote 7’ authorities[4] – with increased emphasis on protecting ‘character’ in the proposed NPPF amendments, authorities that are significantly constrained by ‘Footnote 7’ designations (i.e. where such constraints cover more than 50% of total area) are likely to have increased justification for strongly protecting these areas from development through reduced housing requirements.

In the short term, the potential opportunity to reduce local plan housing requirements may well prompt a delay to work on emerging local plans. Of the 126 authorities that currently still working on a review of their local plans:

22 are London Boroughs;
A further five authorities are subject to the 35% uplift;
A further 20 authorities are subject to significant Green Belt constraints (more than 50% of total area); and,
A further 12 are subject to other ‘Footnote 7’ constraints (more than 50% of total area).

Therefore, in addition to the 44 authorities that have already paused work on their local plan review we estimate that a further 59 authorities are at risk of following suit. This would equate to a total of 103 of 170 authorities that have commenced a local plan review either pausing or being at risk of doing so as a result of the Government’s proposed planning reforms. This is a matter of very significant concern and should be viewed in the context of the Government’s recent consultation on reforms to national planning policy stating that “Our proposed changes for planning for housing are intended to support plan-making and in doing so help deliver more homes.”[5]

Ironically, the consultation itself, and the lack of certainty over the future of planning reform, has led to an impasse in plan-making across the country which will result in thousands of new homes along with the associated benefits and infrastructure being held up. By our estimates, almost two-thirds of the authorities currently reviewing their Local Plans are putting this process on hold or are at risk of doing so.

[1] UK housing crisis: planning targets scrapped in ‘win for nimbys’, The Times

[2] Councils scrapping building targets will make housing crisis 'even worse', The Telegraph

[3] Local Plan: monitoring progress, Gov.uk

[4] Footnote 7 of the NPPF includes other designations which can provide a strong reason for restricting development, including Sites of Special Scientific Interest, Areas of Outstanding Natural Beauty, National Park designations, designated heritage assets, and areas at risk of flooding or coastal change.

[5] Levelling-up and Regeneration Bill: reforms to national planning policy, Gov.uk (paragraph 6).

Retail therapy: the changing face of town centres

James Burman 18 Apr 2023

As Spring emerges, there has been some positive news for town centres since the start of the year. Last month the former John Lewis at Birmingham Grand Central received unanimous approval to be turned into a new mixed-use development containing offices, gym, food market, bar and restaurant. The Hammerson site to be called ‘Drum’ (reflecting the shape of the building but also a nod to The Crown pub across the road where a 1968 blues band called Earth became heavy metal legends Black Sabbath) has been designed by Ken Shuttleworth of Make Architects also responsible for another landmark Birmingham building The Cube.

For those that aren’t aware (as I wasn’t), the John Lewis at Grand Central was open for 234 weeks before the first lockdown hit in 2020 and has been closed since. In announcing plans for Drum back in January Andy Street, Mayor of the West Midlands said that ‘City centres have to move away from retail only’. This approach, and the different ways to achieve it, is what this blog explores.

Regional city centres are often harder to ‘unlock’ than that of say capital/larger cities where footfall is higher, disposable income is often higher, public transport may be more effective and key retail areas may have greater support from councils/government (list not exhaustive). However, diverging away from a retail only approach is a strategy which can be utilised to breathe life back into unused buildings and attract a more diverse range of visitors back into urban centres.

In addition to the Drum approach of complementing a mainly office use with other traditional uses such as food and beverage, there are other approaches for landowners, developers and Councils to implement.

In Bristol for example, the former 70-year home of Marks & Spencer will become a temporary art and sustainability centre following the stores closure last month. A stone’s throw away, another large department store (Debenhams) has been closed since 2021 ; however, there are signs of life, with the building recently being purchased and its interior cleared. While there has not been an announcement of what the building will be used for, the Mayor of Bristol, Marvin Rees, has suggested it will be a mixture of uses like retail, office and residential but that any use must tie in with the City Council’s own plans for the wider city centre. Certainly, the reopening of this prominent city centre building in whatever capacity will be a positive for Bristol. The Bristol Property Agents Association annual newsletter also identifies that “Broadmead faces the prospect of a major realignment as shopping habits change and unit configurations become increasingly outdated”. As well as the Galleries c.£550m GDV redevelopment, it suggests “that some other parts of Broadmead would also benefit by increasing occupational density through a mix of uses: to change the dynamic of the area, make it a 24-hour location, and generate additional footfall for the businesses that remain.”

The ever-evolving nature of urban centres is of course a two-way street. Rather than all responsibility lying at the doors of landowners/developers, Councils’ must create facilitative environments through local plans and policy to enable town centres to become truly mixed use, as opposed to the historic reliance of Class A1 retail. We have seen this shift in Government policy with the creation of Class E (covering Commercial, Business and Service uses) however local councils can take this further in order to shape the future of their centre.

One example of this is the Bristol City Centre Development and Delivery Plan (DDP) that is in preparation to guide the recovery, regeneration and transformation of Bristol city centre. It builds on and progresses the City Centre Framework (adopted in 2020) which set out principles and broad proposals for regeneration and development. If approved, the Bristol City Centre DDP will become a ‘material consideration’ in the planning process, when planning application decisions are made, as well as to generally guide the Council when making land and investment decisions. I’m particularly excited to be part of Bristol City Centre as it evolves over the next decade and help clients utilise town planning as a positive agent of change.

Lichfields Insight ‘London’s Town Centres’ suggests 4 potential outcomes projected for town centres and while this is London focused, these can be adapted and are still very relevant at a regional level too. The Insight recommends policy makers, asset managers and other town centre stakeholders consider the appropriateness of alternative actions for their centres, including:

Regeneration strategies and Town Centre frameworks: these need to be informed by centre level analysis of past and future projected changes and an assessment of the needs and opportunities for change for individual centres, potentially accommodating a more diverse mix of uses (including education, healthcare and residential), and steering such change spatially.
Planning policies and site allocations in statutory Development Plans: these should be reviewed and updated to provide a positive platform to support centres’ adaption and diversification, incorporating the Class E flexibility.
Development management: the assessment and determination of planning applications should support development intensification and optimisation on appropriate sites in or on the edge of centres, including, for example, identifying suitable sites for tall buildings and appropriate mixed-use locations.
Town centre management: to pro-actively manage all town centre environs but particularly for centres where churn is lower.

With these suggestions in mind, while there continues to be negative ‘doom and gloom’ conversations around the future of the high street and town centres, with the right combination of top-down legislation/governance and bottom-up innovation and creativity, the future of city/town centres looks bright. I sincerely hope we can one day reflect that the move away from ‘retail only’ allowed urban centres to thrive once again.

Sources:

London's town centres retail mix of the future, Lichfields

Birmingham John Lewis store to be replaced by offices and foodhall, ITV

Empty Bristol M&S store to become art and environment hub, BBC

New owner of former Debenhams department store sets goal for ‘thriving city’, Bristol World Bristol City Centre DPD

Birmingham City Council unanimously approves Hammerson’s transformational plans for its Drum repurposing, Hammerson

Overcoming the barriers to growth, BPPA Newsletter

Use Classes Order Guide in Scotland

Rachel Affleck 04 Apr 2023

Lichfields’ Use Classes Order Guide summarises, in an easy-to-use chart , all the use classes in Scotland and how it is possible to change from one use to another without having to apply for planning permission.

Recent Changes to the Use Class Order in Scotland

The Town and Country Planning (Use Classes) (Scotland) Order 1997 groups different types of property and land uses into separate ‘use classes’. The Town and Country Planning (General Permitted Development) (Scotland) Order 1992 sets out permitted development rights which allow for certain forms of development to take place without the need to apply for planning permission.

Since 2020, the Scottish Government has been carrying out a review of permitted development rights and of the Use Class Order. A three-phased programme is currently being undertaken, with each phase focusing on a different type of development.

Below, we have set out the three phases that are currently being undertaken.

Phase 1

Phase 1 introduced The Town and Country Planning (General Permitted Development and Use Classes) (Scotland) Amendment Order 2020. This came into force on 1 April 2o21. This order amends the Town and Country Planning (General Permitted Development) (Scotland) Order 1992 to introduce new classes of permitted development rights.

Changes were made in relation to introducing new permitted development rights for digital connectivity, agricultural developments, peatland restoration, development in relation to active travel and aquaculture.

Phase 2

In February 2023, legislation was laid before the Scottish Parliament to change use classes and extend permitted development rights. This new legislation is called The Town and Country Planning (General Permitted Development and Use Classes) (Scotland) Miscellaneous Amendment Order 2023. This came into force on 31 March 2023.

The new legislation amends the use class order to replace use class 1 (shops) and use class 2 (financial, professional and other services) with class 1A (shops, and financial, professional and other services). The new use class 1A groups the uses previously in use class 1 and 2 of the Use Class Order into one single class. This creates an extension of permitted development rights making it easier to convert between uses without the need for planning permission.

In addition, extended permitted development rights were given to electric vehicle charging infrastructure and operational port development.

Phase 3

Phase 3 of the review is set to focus on domestic and non-domestic renewable energy equipment. The consultation is expected to be published in spring 2023. Updates on phase 3 will follow during the course of the consultation.

Lichfields Guide to the Use Classes Order in Scotland

Following the coming into force of the Town and Country Planning (General Permitted Development and Use Classes) (Scotland) Miscellaneous Amendment Order 2023 on 31 March 2023, we have fully revised the Lichfields’ Use Class Order in Scotland Guide. This shows the new use classes and the permitted development rights available for changes of use between each of the various use classes.

The Lichfields’ ‘Guide to the Use Classes Order in Scotland’ has been significantly revised to show the change of use permitted development rights that have come into force and to provide a comparison of current use classes and use classes prior to 31 March 2023.

Please contact us if you wish to discuss any elements of the guide.

Download guide to Use Classes Order in Scotland

Planning matters

Broadening Horizons - Retail and Leisure Post-Covid