The final blog in our Town and City Centre Living
series explores the economic benefits that a vibrant town and city centre residential offer can help to unlock.
In general terms, the economic benefits of new housing delivery are widely recognised. They have been considered in detail – by Lichfields – in
economic footprint reports produced on behalf of the
Home Builders Federation and
Homes for Scotland and include:
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Creating new jobs and economic output;
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Attracting additional expenditure to an area; and
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Increasing local authority revenues (via Council Tax and New Homes Bonus payments).
In town and city centres, the opportunity to bring together residential development with high concentrations of employment and leisure uses can help to create a uniquely concentrated cluster of economic activity. This can support a range of additional benefits such as:
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Enhancing the vitality and vibrancy of centres;
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Supporting higher levels of expenditure retention; and
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Attracting a pool of talent that can help to drive economic growth.
Lichfields regularly supports clients to deliver town centre transformation, applying our
Revitalise toolkit In many instances, the package of interventions developed to reinvigorate a centre will include the reintroduction of a high-quality residential offer, for the reasons outlined above.
Vitality and Vibrancy
In response to the rise of online shopping, town and city centres are transitioning away from a retail-led offer, with their role increasingly defined by the experiences they can provide. This was highlighted in a 2021 survey of economic development professionals conducted by Lichfields and the Institute of Economic Development, which identified the two key drivers of town/city centre footfall as:
The additional population attracted by residential development helps to animate town and city centres outside of core office and retail trading hours. This plays an important role in supporting the shift to a 24-hour economy, providing additional demand for bars, restaurants and leisure attractions. This can also help to establish a virtuous circle, with a stronger, more distinctive leisure and cultural offer creating more reasons for people to travel into the centre from elsewhere.
Expenditure Retention
A key benefit of town centre and city centre living is the convenience that it offers. Residents are often just a short walk from a variety of shops, restaurants, bars and leisure activities. This generally encourages higher rates of expenditure retention, as residents’ needs are met within their local authority of residence. This contrasts with residents of more suburban locations – who are often more inclined to travel out of their immediate area to meet their retail and leisure needs – sometimes to facilities in surrounding boroughs.
This is illustrated in Figure 1, which is underpinned by data from a sample of local authority retail studies. It highlights that the proportion of expenditure retained within Nottingham is much higher for those living in the city centre (91.7%) than the wider authority average (37.9%)
[1]. A similar picture can also be observed with respect to Leeds
[2] and Durham
[3].
Figure 1: Spend Retention Rates in City Centres vs Wider Local Authority Averages
Source: Lichfields analysis
Higher retention rates can benefit a host of town centre stakeholders. Businesses benefit from increased revenues as well as (typically) higher footfall and greater vibrancy. Such conditions are also likely to result in a lower unit vacancy rate within the town centre, thereby unlocking additional business rates income for the local authority.
Attracting Talent
Previous research (including work by the Centre for Cities) indicates that city centre housing markets are dominated by younger residents, with many well-educated and in professional occupations
[4]. Whilst residents are generally attracted to city centres by the concentration of employment opportunities, the availability of good quality housing and a vibrant nighttime economy can position centres favourably to attract and retain talent. With the
Levelling Up White Paper seeking to boost UK productivity, and labour markets continuing to tighten, the availability of a skilled workforce will be critical to achieving economic ambitions at the national and local level.
Figure 2: Age Profile of Town Centres vs Wider Local Authority Areas
Source: ONS/Lichfields analysis
NB: analysis based on a sample of towns in the north of England
Summary
A vibrant town centre living offer can play an important role in strengthening successful town centres – and in rejuvenating less successful ones. Introducing more high-quality housing can help to increase footfall and vibrancy and increase levels of expenditure retention. Both factors can encourage the development of a leisure and cultural offering with greater breadth and depth – helping to draw people into a centre more regularly and from a wider catchment.
[1] Greater Nottingham Retail Study (2015)
[2] Leeds City Centre, Town and Local Centres Study (2011)
[3] County Durham Retail and Town Centre Study (CBRE) (2018)
[4] Figure 2 shows the age profile of selected town centres in the north of England, benchmarked against their wider local authority areas
Header image: 2 Berol Yard (Credit: Berkeley Square Developments)
