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The lockdown has brought business to a grinding halt for most companies on the high street. Non-essential shopping, restaurants, bars and pubs now all have been severely disrupted for almost five weeks and this is likely to be the case for many weeks to come.
This, of course, depends on how long lockdown continues for and the extent of the Government’s continued support. A lockdown so long that long-term behaviours start to change will call for a reassessment but otherwise, the health of high streets going into the crisis offers a reasonable guide.
Places were at different footings going into the lockdown. Not all high streets were in decline – some have adapted very well to changing consumer habits and were, in fact, thriving. As the map below shows, vacancy rates were as low as 7 and 8 per cent in Brighton and Exeter respectively. Some places, however, were struggling – roughly one in five storefronts were empty in Hull and Wigan and this rises to nearly one in four in Newport.
Figure 1: High street vacancy rates, all city centres
Source: Local Data Company
The high streets that thrived were supported by strong local economies. The city centres with the lowest vacancy rates were the ones that are more than just shopping streets. They are also home to many offices, pulling in tens of thousands of workers to walk past – and into – their shops, cafes and restaurants on a daily basis.
High streets that were performing well are better placed to recover post-locked down. While it is unlikely to happen overnight, demand will eventually pick back up in these places as people start working from offices, go to a cafe at lunch or a pub after work again. What is less clear is whether this will be the same cafe or pub – while there will be demand for a cafe, the current crisis may mean that existing businesses may not survive unless Government support is extended. The question for policymakers is whether they think this warrants additional support.
Weaker city centres that were already in decline will likely see things worsen. City centres that don’t have these office jobs and are reliant on weekend trade are less likely to see a similar bounce back. Of course, where vacancy rates are higher, there are fewer businesses trading and so a smaller number to apply for Government support. Extending current schemes might help stagger closures in the short-term. It cannot, however, address the lack of demand or the long-term decline.
The problems in the weak city centres are much more fundamental, the coronavirus crisis only makes them more pronounced. These city centres need support and funding to transform into attractive business locations, by investing in office space and the public realm.
The Future High Streets Fund is a step in the right direction, but lacks the scale required to address the size of the issue. Instead, the Government should treat city centres as an asset class, in the same way, that roads and rail are, and create a ‘City Centre Productivity Fund’. This fund would be a £5 billion pot with the aim of improving the attractiveness of city centres as places to do business, which in turn would have a positive and sustained impact on the high street.
This is not a short-term fix and would take many years to fully implement. But short-term fixes alone, designed to get existing high street businesses back on their feet will do nothing to address the more structural decline high streets have undergone. Only by addressing this will they have the chance to turn their fortunes around. The coronavirus crisis just accelerates the urgency of addressing it.
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