19 August 2010

Why are property owners letting our town centres die?

Urban Splash's new development will host a pop-up
Although some landlords have started to see the benefits of pop-ups, the majority are just not interested. Amit Katwala explains how their involvement could save Britain’s high streets

The recession has left at least one in eight retail units across the country lying empty. The pop-up is the perfect antidote to the problem, and the involvement of private landlords could potentially rejuvenate the high street and help boost economic recovery. However, they have been slow to take advantage of the opportunity, reluctant to let pop-ups use their premises.

Jeremy Shapiro, town centre manager for Camden Council, helps set up pop-up businesses as part of a regeneration initiative. From June 2009 to June 2010, the council ran 47 exhibitions, shops and events in nine different spaces, only two of which were privately owned. Shapiro said that many landlords had been on the verge of signing agreements, but pulled out because they found long-term tenants, or were worried about potential risks.

Shapiro added that estate agents were often reluctant to help those looking to host pop-up businesses. “They obviously exist to make money, and it’s difficult for them to do it with pop-up shops,” he said. “They still have to do all the same things, so for them it’s more work for less money.”

Laura Hamilton sources retail spaces for commercial property firm Savills. She said estate agents have issues with pop-up shops: 

“Some tenants don’t treat it as seriously as landlords would like, and don’t create a quality storefront”. 

Savills is helping Early Learning Centre find properties for a series of Christmas pop-ups, and Hamilton admits that it is only through larger projects that commercial estate agents can make worthwhile profits. She added that they are much happier giving short-term lets to large companies because of the reduced financial risk.

Rosalind Renshaw, editorial director at Estate Agent Today, thinks that estate agents would be willing to work with the pop-up industry if they were more aware of it. “It’s a completely unexplored market, and would be very useful to the commercial estates industry, which has been on its knees for years,” she said. “Unfortunately the industry is very traditional when it comes to finding new sources of revenue, but I think if there were more articles and media coverage they would pursue it.”

Views are slowly changing. Last month, two large property developers gave prospective pop-ups the chance to win a prime location for their businesses. Shaftesbury gave competition winners a week’s use of a space in London’s Covent Garden. Regeneration specialist Urban Splash is also running a competition, giving away a year in a space in Manchester’s New Islington.

Matthew McMillan, deputy chief executive of Camden Town Unlimited (an organisation that aims to improve the area as a place to work and live in), explained the reasoning behind this. He said: “Nothing markets a property better than a thriving business inside.” He believes that the competitions are a clever marketing trick designed to create interest from potential tenants, and said he wouldn’t be surprised if more property owners started to offer free rent to pop-up businesses to promote retail space.

McMillan said this is because pop-up shops are only practical for property owners if used as a marketing tool, and a series of short-term lets are cumbersome. “It’s much easier to get someone in on a five or six year lease and watch the money roll in,” he said. “You have to worry about changing names on utility bills, insurance policies, and business rates. So unless someone takes a property on a longer-term basis and allows other people to use it rent-free I wouldn’t recommend it.”
Competition winners will use this space in Covent Garden

McMillan’s organisation uses pop-ups as a way of regenerating Camden. After redecorating vacant lots, it offers spaces for free to businesses and other projects, paying rates on their behalf.

Ventures hosted in these spaces include an orchestra and a graduate fashion show. McMillan said: “We’ve taken on three units so far, and they’ve all been rented or sold within eight weeks. One was on the market for six months before we moved in, and we sold it eight weeks later.”

This highlights the ability of the pop-up shop to shift rental properties, but much more than marketing value can be gained if private landlords take a more progressive view. Camden, once considered London’s creative centre, has fallen behind in recent years. McMillan is enthusiastic about bringing the area back to what it once was, and believes that landlords can benefit from allowing pop-ups to use their space, because they improve the way people view the whole area.

“It encourages new business, and adds diversity,” he said. “Our vacancy rates went down during the recession, which I would attribute to pop-up shops.

“It’s a relatively cheap way of changing an area, and it can have a big impact on people’s perception. If you compare it to a million pound public rail project, it’s much cheaper – for £50k or £60k you can change the whole tone of an area.”

Shapiro believes the government should encourage landlords to take on short-term lets. 

“If there could be some exclusion from business rates for temporary uses, it would help get more private property owners involved,” 

he said. “There are a few enlightened landlords who would give up their property, but the rates are substantial and few small tenants can afford them.”

Despite the general reluctance, there has been an increase in property owners offering short-term lets due to the recession according to Rosie Cann, who runs Popupspace.com, a website that lists properties available on temporary leases. However, because of the difficulties of setting aside a specific property for use by pop-ups and the reluctance of estate agents, it seems likely that most property owners will only offer their space if they are looking to sell or lease it, or as part of a community regeneration scheme with financial support.

Governing bodies have a role to play in filling empty retail space and revitalising Britain’s high streets. Councils and community organisations are doing their part, but a national scheme to make short-term lets easier for private property owners could kick-start the pop-up revolution.

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