In January 2020, ANP – the Dutch Press Office reported that again more retail space is standing empty. This is a trend that has been going on since several years now. What is more interesting is, that the increase is not mainly by the bankruptcy of one of the big department store chains but because more and more small owner run shops are closing not filing for bankruptcy. With the main shopping streets mainly dominated by the big retail chains, this therefore mainly affects the smaller and local shopping streets. It does not come as a surprise. In recent years online retail has skyrocketed and small shops either did not have the marketing power, the products or the knowledge to compete against Amazon and BOL or they chose the same route, moving their activities online. As a result, the local high street is boarded up, reducing the attractivity and the ability of the remaining shops to lure in customers further. In Zoetermeer, a mid-size Dutch city on a stretch of 200 meters of shopping street 14 shops are empty, in Hillegersberg, an upscale neighbourhood of Rotterdam the number stands at 23 on half a kilometre and in many other local centers the same phenomenon can be observed.
If no action will be taken, then the remaining shops will also disappear soon, leaving a deserted place where a couple of years ago things were busy and lively. But acting is a complex operation. One might think: Why not just turning shops into offices or apartments? Then there are eyes on the street and while creating a different atmosphere at least there is life. The problem lies in the huge differences of rent levels between these uses. Retail delivers much higher rents per square meter than offices and housing often deliver less than that. But the value of commercial property primarily is measured by its income potential and these values are in the books of its owners and the banks that finance it. Changing a use therefore would lead to a reduction in value which in turn leads to a loss in the accounts – something any owner wants to avoid. Only after values in books have depreciated enough – and that often takes decades – regeneration might become a possibility. Too late to save a shopping street and the remaining businesses.
This problem has become big and it will become even bigger in the future. With the help of local governments and a proactive approach, this fate could be turned. The local shopping street often are in central and reachable locations. Ideal conditions to create jobs there and bring a daytime population that can also help the remaining local retail to thrive. Why not turning shops into offices? Several shops along a street could form a bigger office with the street itself becoming the office corridor where communication and encounter take place. Why not allocating workshops there? They used to be there and were pushed to industrial areas because the high street was considered too valuable to leave it to these businesses. With the tide turned, bringing them back might be an option. And what about organising education in a different way and establishing classrooms in shops? Add to that the possibility of turning shops into residential and you end up with a mix of possible users whose demand can be met by the sizes of spaces available.
If an instrument was established that allowed commercial owners to keep values in their – e.g. by a depreciation delay and a public sector guarantee towards banks for the difference in value between commercial shop and other uses, then this would be possible. Without any tool, the cost of policing an abandoned shopping street and bringing it to life 20 years later will be a lot higher and the process will take a lot longer, not to forget the missed opportunity of keeping some of the shops with offers that cannot easily be moved online.
Action is needed urgently! When will cities act?
by Markus Appenzeller.