04How do city centres vary?

City centres should be the ideal place to locate a specialist or premium amenity. The central location of their high streets brings people together, maximising access to a city’s customer market. But this is not currently the case in all city centres. Some high streets do not house many amenities beyond the day-to-day offer and are also struggling with high vacancy rates.

The nature of the high street is determined by the underlying strength of the city centre economy.

The composition and health of a city centre’s high street is closely linked to the strength of its underlying economy. One of the core groups of customers sustaining local services on the high street is workers, and so the type and number of jobs located in the city centre has a significant impact on the nature of the amenities on offer.

In strong city centre economies, the existence of many well-paid, high-skilled jobs in exporting firms means it is possible to sustain a healthier high street, which offers something beyond the day-to-day. This is seen in three ways.

1. Strong city centres have more specialist and premium amenities

On average, a quarter of a city centre’s amenities are specialist while the remaining three-quarters are day-to-day. But in some city centres, the share that is specialist is much higher.

In London, 37 per cent of the city centre is taken up by specialist amenities such as cinemas, bars and performing arts venues; in Manchester city centre, they account for 28 per cent. In contrast, in Mansfield and Barnsley just 7 per cent of the city centres’ amenities are specialist, as shown in Figure 13. The vast majority of the high street is devoted instead to day-to-day amenities such as cafés and shops selling clothes or household goods.

The same is true for the ability of city centres to host more expensive amenities. The share of the high street taken up by premium shops and services is highest in London, at 11 per cent, and lowest in the five cities which have no premium amenities, including Gloucester and Slough.

The strongest city centre economies, which have attracted the most high-skilled jobs in exporting firms, host more specialist and premium amenities. These strong city centres are shown in the top right quadrant of Figure 14, as they have a large base of high-skilled exporting jobs. The size of the circles represents the share of high street amenities that are premium.

In contrast, the bottom left quadrant of the chart contains the weak city centre economies that attract few high-skilled exporting firms. Here, the very small circles show how rare premium amenities are on these high streets. The same pattern is seen for specialist amenities, with stronger city centre economies housing more.

The presence of well-paid workers in and around the high street creates demand for amenities. These workers will often spend their lunchtimes and evenings using the shops, restaurants and bars near their workplaces, providing an additional source of footfall and spending power on top of residents and visitors. In doing so, they are sustaining local services firms on the high street. This effect of high-skilled exporting jobs creating and sustaining jobs in local services is known as the multiplier, and is explored in Box 3.

The top left quadrant of Figure 14 includes a group of moderately strong city centres. Their smaller number of exporting jobs, even though most are high skilled, limits the amenity offering they can sustain. As a result, most of these city centres have a relatively strong premium offering but lag slightly behind the strongest city centres in the top right.

Cambridge is an exception to this, housing as many specialist amenities as many strong city centres. This is likely to be due to its ability to draw in large numbers of visitors, who generate additional demand for amenities.

2. Strong city centres are less reliant on retail than weak city centres

A closer look at the composition of city centre high streets reveals how the strongest city centres offer a different mix of amenities. Not only do they provide more specialist and premium amenities, they are also less focused on retail than weaker city centres.

In the strongest city centres — those in the top right quadrant of Figure 14 — food and drink account for 46 per cent of amenities. In Figure 15, this is contrasted with weak city centres where this figure is lower, at 32 per cent. Instead, they are more focused on retail. The share of the high street which is retail is 43 per cent in weak city centres but only 33 per cent in strong ones.

Stronger city centres are able to better match current customer preferences. Retail is taking up less and less space on high streets across the country as customers shift to online shopping, while places to eat and drink are less replaceable and so have not seen the same decline. Figure 15 therefore suggests that weaker city centres may be more vulnerable to the continued evolution of the high street.

‘Cultural’ amenities account only for a small part of high streets. This group of amenities, usually defined by policymakers as including theatres, museums, galleries and other performing arts venues, are currently prominent in discussions about what cities can offer consumers. But they account for only 1 per cent of the amenities on weak city centre high streets, and 2 per cent in strong city centres.

3. Strong city centres have fewer high street vacancies

As well as having a different composition, stronger city centres also have healthier high streets. Previous Centre for Cities research has shown that not all high streets are struggling¹⁵, as those in strong city centre economies have relatively few empty shops.

This is illustrated in Figure 16, which is the same as Figure 14 except the size of the bubbles now represents the share of high street services that are vacant. In the bottom left quadrant, empty stores account for up to a quarter of the high street. For example, in Newport the vacancy rate is 24 per cent and in Wigan one in five high street units is empty.

In contrast, city centres in the top right have much smaller vacancy rates. In Cambridge and Brighton, as little as 7 per cent of the high street is empty.

This variation in the health of the high street calls into question the argument that online retail is the main cause of decline. Since the benefits of online shopping are the same in Cambridge as in Wigan, all other things being equal, online retail should mean a consistently high number of empty shops in all cities. Instead, it is the lack of spending power and footfall in many weaker city centres that limits the ability of cafés, restaurants and retailers to stay open.

Where the city centre economy is strong, there are many high-skilled exporting jobs providing workers with money to spend on the high street. This creates enough demand to continue to sustain bars, theatres and shops.