Life Expectancy of a Retail Location?

The Life Expectancy of Retail Locations.

Join Gary Marshall in this episode of 'That Retail Property Guy' as he explores the life expectancy of retail locations and the implications for developers, tenants, shoppers, and communities. Is the end nigh at 35 years? Prompted by contrasting news articles, Gary delves into the factors affecting the longevity of maturing retail spaces. With notable examples like Sheffield’s Meadowhall and Newbury's Kennet Centre, consider how high streets and retail centres can evolve, adapt or repurpose over time, and the varied fates of city centres versus out-of-town retail parks. The episode concludes by questioning whether the future of retail lies in adaptability, repurposing, or returning to more localized, community-focused models.

00:00 Introduction to Retail Property Life Expectancy

01:57 The Golden Age of Retail

03:09 The Decline of Retail Spaces

04:40 Case Studies: Retail Locations in Crisis

07:35 The Future of Retail Spaces

16:36 Conclusion and Final Thoughts

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Transcript

0:00

Welcome to that Retail Property guy with your host, Gary Marshall. In each podcast episode, we delve into topics relating to estate management from the perspective of a retailer as tenant In this episode, let's discuss the likely usable life expectancy of a retail location, and how does that impact our decisions as developers, as tenants, as shoppers, or community planners. In part, this was prompted by two seemingly conflicting articles online this week, highlighting the passing of time and the associated fortunes, good or bad, of a couple of retail locations. It made me think what is the average life expectancy for a retail location in any town or city or regional location near you? An obvious title for this episode could, I suppose, have been a tale of two cities, but it's about more than two cities. It's about all cities and all towns and all other locations where retail has a presence. It's about the life of the fabric of a building. It's about the changes in demand for the usability of a building. It's about the prospect of maintenance, the chances of repurposing after any initial purposes. Petered out. It's about the impact of retail development on our communities, about the perceived benefits of new, for old at least until new grows old and, and then what the two locations in question were undeniably different, but that just serves to highlight the ability of a location to respond to changes to the passage of time, so we can easily conclude. That there isn't a one size fits all solution to the question. One location was the humongous Meadow Hall Shopping Center, just off the M1 near Sheffield. The other was the Newbury Kenneth Center. Different beasts, absolutely with different tales to tell. We'll come back to these later. But our story starts somewhere in the late 1980s, maybe the nineties, so 35 to 40 years ago. Those of us with long enough memories to remember those heady days of the retail boom might forgive their younger selves for thinking that maybe snazzy new retail destinations were here to stay dominating the local High Street competing with the established prime pitch of the city center springing up like mushrooms in regeneration sites along arterial roots. And motorways compared to the dreary shopping experiences that went before it. Everything seemed so golden, so buoyant, so gratifying. It even coined a phrase, retail therapy. Families would dedicate a weekend day out to head to a mega shop or a destination center. IKEA at Warrington, which opened in May, 1987, was a well-known tourist attraction. It even featured on the top 10 list of things to do in Warrington, a wonderland of bright colors and innovative ideas. All finished off with Swedish meatballs and all under one roof. Most importantly, sheltered from the inevitable northwest rain. Fun for everyone, including the kids. But as the decades have passed, that tide of retail demand, excitement, and passion seems to have faded. IKEA is still doing incredibly well, even opening a high street store in Central London, but for other retailers and in other locations. That story might differ. Changes are evidenced most strongly in the precipitous decline in rental levels and let ability, if that's a word, back in the day, retailers competed for space, offering premiums to take new leases or pick up assignments from other tenants. These days, agents generally struggle to let new space. A new open market rents undermine the established levels from the 1990s, which have long served as the basis for asset valuations that nobody really wants to accept are heading south. For many landlords and developers, this sea change is bad News. Assets which were built are acquired on the basis of established values with a forecast of growth turned into white elephants stuck in the past. These depreciating assets. Impact loans and interest rates and dividends and reinvestment opportunities for many local shoppers, residents, local authorities. The pain is just as tangible with depressing, derelict and downtrodden high streets, empty arcades and shuttered sensors. So in some cases, just 35 or so years since the fanfare and grand launch of many a glittering new retail offering. We now have to ask ourselves, what is the life expectancy of a retail location? Oxford Street, anyone seems impossible to imagine Oxford Street on its knees, but it has been that incredible footfall hasn't always delivered. The sales required to support the rents that support the investors, whether they be equity funds or our pension plans. And it seems the same all around us. Town after town, city, after city, with a staggering amount of empty retail space, deteriorating casting a cloud of despondency over the residents. It's partly the shopping public's own fault. Our preference for online SAPs, the lifeblood of retail locations. Can the companies or the local authorities that own these schemes find a way to breathe new life into them? Conversely, should we the great British public even want new life breathing into them? Or should we breathe a sigh of relief and press the reset button, allowing retail to contract maybe back to its Victorian roots, occupying a smaller footprint of our built environment and surrendering much needed space for much needed housing, or maybe for warehousing and distribution hubs. Before the boom period, most retail was in a high street location. Its catchment area was extremely local shops met local demand. Many shoppers visited their high street every day. Many traditional high streets still exist like Stanford. Well worth a visit if you fancy a day out. A mishmash of Hile de Piggly. Old buildings traditionally constructed to last forever, offering unusual configurations of space under the curation of different landlords. Some date back to the 20th century, some to the 19th, some even earlier, and still going strong. The oldie worldy layouts might confound a modern retailer's store layout team who crave neat rectangular boxes with standard dimensions to replicate a proven fit out concept, but the individuality of the space offers something else. Character in other locations. Back in the day, there was a surge of new developments, sometimes doubling the availability of retail space available in a town center already for our racks and our sock shops, our Ratners Jewelers, our Thomas Cook Travel agents radio rentals, which rented TVs more than radios, Sketchly dry cleaners. Our price records Mother Cat. Early Learning Center, top Shop, EAM Principles, Woolworths and Debenhams. You get my point. These brands catered for and fostered a demand for retail space that is no longer so demanding as brands disappear without replacements and so demand for retail floor space declines. Those develop. Lack purpose. And as the great shopping public, we must recognize our pivotal party. In this decline, retail is a two-way street. Businesses offering products for sale and customers lining up to buy them. Footfall has changed with the convenience of online and working from home. In recent years as more and more office workers have become home workers, so retail locations near expensive offices and the transport hubs that serve them have suffered mightily. In 2024, the House of Lords Built Environment Committee conducted an inquiry into how high Streets could be regenerated and become more resilient and attractive. Unsurprisingly, they discovered those obvious challenges, the rise of online shopping, the impact of the COVID pandemic, the effect of inflation, rising operational costs for businesses, but also competition from outta town shopping centers. Again, more on that later. The report noted just how many major UK retailers had gone into administration since 2009, which coincides with Woolworth's demise. It commented on an investigation by the BBC that 9,300 retail outlets were lost from British High Streets between March, 2020 and March, 2022, let's call them the COVID years. We measure so much in terms of before COVID and after COVID. The report ended optimistically suggesting that there could be a flourishing future for high streets, but noting that there was now greater demand for restaurants, leisure, health centers, public services, and so on, to play a bigger role in town centers. It didn't specifically mention alternative uses like housing, but that does seem a common and pretty obvious reaction up and down the land. But it did recognize that the landscape has changed and that something needs to be done. So back to those articles. The first one was about the potential redevelopment of the Kennet Center in Newbury. Those who know it would recognize the sad downturn of this scheme, originally from the 1970s, but doubled inside in the mid eighties, so now 40 ish years old. An unloved and unwanted, the shopping public has little interest in its dated appearance and layout, and retailers have little interest in the configuration challenges of its units, but it sits in a city center, so it's an important factor in the community and it's substantially built, not a simple structure to remove or adapt. So recently much fanfare accompanies the announcement of planning permission, having been granted to substantially redevelop it after just 40 years in the East Midlands. The Caron Center in Loughborough is another similar story, an original scheme from the 1970s substantially rebuilt in the nineties, so only 30 something years old, but struggling with the loss of big brands with competition from edge of town and outta town retail developments. Again, this development is very much an integral part of the identity of the town, but at 30 years old, it stays are numbered. The owners decided to redevelop. They implemented a plan to decant the remaining retail tenants who either ceased trading or picked up vacant traditional shops. In the older High Street, the owners gained possession and intended to demolish 70% of the structure for residential development. Luper is a big university town. Lots of demand for residential. Initially they planned this redevelopment under permitted development rules, which wouldn't require planning permission, but the council stepped in the community with a capital C wants its say, in this big impact development after just 30 odd years. Also in the East Midlands, although don't take this as a theme that it only applies in that region there is, or was the Broad Marsh Center in Nottingham. The broad marsh was one of those ugly buildings of its time. It served a purpose, but failed to really deliver what Nottingham needed, especially after the much more glamorous Victor Center opened. The original Broad Marsh District was an historic slum of Nottingham through active slum clearance in the sixties and the seventies, the Glocal Council assembled a large space suitable for regeneration. So in 1975, a shopping center was created a huge and fairly childless enterprise with its own car park and bus station and a new road layout that severed the old thoroughfares between the city center. And the edge of town, including the railway station, decades past, and for various reasons, not solely connected to Nottingham, broad Marsh, the landlords got into difficulties and finally went into administration in 2020, by which time the center was 45 ish years old and partly demolished. The landlords had started a scheme for rejuvenation, but couldn't finish it. When they went under the local council who were the free holders, got the site back, eventually demolished what was left of the old structure, and their intention is to provide around a thousand new homes with some retail office and community facilities, of course. So these tales teach us that typical retail schemes might have a durability of purpose of just 35 years, that they have to be attractive, pleasant, accessible, and adaptable as times change. They have to work with the community, not against it. And it teaches us that retail isn't the be all and end all of town center development, despite what my younger self might have thought. But hey, I mentioned a couple of articles. What was the other one? I hear you crying. Well, in our Tale of Two Cities parable, there seems to be a retail development that is booking the aforementioned trend. Meadow Hall, just off the M1 near Sheffield, a glittering destination with a humongous catchment area built on the site of a former steelworks. Opened 4th of September, 1990. So happy 35th birthday to Meadow Hall. At the time, it was blamed for a blight on the existing traditional city centers of Sheffield and rather, but it's been an outstanding success evolving over the years to adapt as retailers come and go, customer patterns, change, expectations, mature. Again, worth a day out if you have time. But retailers, demand for space and attractiveness to customers are not the only precursors of a successful scheme. Many other factors are at play maintenance, or at least the method of construction is another key player. Modern retail warehouses on retail parks. Often constructed relatively cheaply with steel portal frames and bolt-on cladding can be more easily dismantled if needs be than demolishing a concrete monolith like broad marsh. Other traditional High street buildings were built to last using materials of their time. But quality and workmanship varied and subsequent treatment and maintenance by occupiers also plays a part. So not all old shops are still viable with decades of useful life ahead of them. Many are only held up by the buildings on either side and the woodworm holding hands. An extreme example of structural issues could be in Mansfield, which featured in the news in August, 2025 when the top deck of its multi-story carpark collapsed in like a sinkhole impacting the stores beneath and in the nearby proximity repairs will be time consuming and costly. The impact to shoppers will be ongoing for quite a while, so shoppers might now make different decisions about where or how to shop. So we realize that there is no single answer to the debate about the life expectancy of a retail location. It depends on so many factors, including financial contributors, such as operating costs, impacted by business rates, price pressure from online competition hikes in national insurance, and minimum wage. We repeatedly see retail chains collapse under pressure. Is corporate retail robust enough to merit building new structures in our community? Well, successful brands like Curry's seem to book that trend. So again, no single answer. Is local retail any better? Can a downturned retail location be sustained by a constant rotation of pop-ups and short lifecycle trends, whether they're vape shops, barbershops, charity shops? Would it be better to yield to realize that the local community doesn't need that retail offer and turn it all over to housing? Well, again, no single answer. Is hospitality a solution? Cafes bars, a nighttime economy, or does that bring its own challenges? Are the life cycles better or worse? The chain run themed restaurants have longevity. Are there community issues with alcohol noise disturbance? Are these operations robust enough to merit new build structures or only to soak up existing surplus space? Basically kicking a can down the road until redevelopment is the only option. So on balance, does hindsight teach us that the longevity of a retail location, its structure, its makeup, its success, depends heavily on the service it provides to the local community. Is out of town retail a good thing or a bad thing? Do Meadow Hall Sheffield and Fos Park Lester suggest this model now works best. Is evolution of traditional something to embrace? Should town center managers recognize when the game is up? Should landlords reshuffle the deck and aim to fulfill other needs like housing? And once again, no single answer. Thank you for listening to that Retail Property guy. I hope you enjoyed today's discussion Don't forget to explore more episodes and if you have ideas for future topics, feel free to share them below. If you enjoyed the show, please consider leaving a review.