Northern lights

The North-East hasn’t escaped the highs and lows of the commercial
property market and many would argue that there are more twists and
turns still to come than you would get on Blackpool’s Big Dipper. Most
will have noted a dramatic change on some of our once bustling high
streets and while the recession is partly to blame, there are many
other factors at work.

Increasingly,  major national retailers
are refocusing their property portfolios.  Their once favourable
attitude to lower volume sales opportunities in smaller North-East
towns has declined. This is likely to continue, as the most cost
effective, high volume locations in the cities and major town centres
outperform the smaller market and mid market locations in both turnover
and profitability.

The growing influence and reach of online
retailing will only accelerate the need for the major companies to
focus on prime sites. However, it can’t shoulder the blame entirely, as
although internet retailing is growing fast, it still only accounts for
a small percentage of total UK sales, meaning that many still prefer to
tread the pavement and adopt a traditional approach to shopping.

Some
of our more venerable locations have been badly affected by the
development or expansion of competing food and non-food retail
destinations close by, which are now too large for the catchment area
they serve. Sadly, the independent retailer has had to look elsewhere
to guarantee footfall to make their ongoing business feasible or close
altogether. However, it’s not all grim up North.

There are
some great opportunities to be had within the region. Retailers have to
be prepared to act quickly and creatively, taking advantage of
opportunities that arise from local knowledge that could otherwise be
missed by those who don’t have a direct connection with the area.

It’s
like this when you go abroad to exotic lands. Most visitors would look
for a tour guide that claimed to know the place like the back of their
hand. So when it comes to looking after commercial property assets,
would your decision on who to use be any different?

As one of
the few national commercial property firms to have a duo of offices
located here in the North East, the importance of an ‘inside view’ to
understand what the local commercial property market has to offer and
where the opportunities really lie, has resulted in a flurry of
activity over the past twelve months.

Gaps in the market have
started to appear, and herein lies the real opportunity for local
multiples to get in on the action. The local market is starting to
recognise the importance of local retailers and the increasing role
they will have in shaping the town centres throughout the region.

Strong
market towns with substantial catchments, inexpensive and convenient
car parking and customer-focused offers will continue to thrive. Hexham
(£40 p/sf), Cramlington (£55),  Morpeth (£40), Northallerton (£65) and
Yarm (£45) are good examples of towns with a future, where rents are in
line with retailers expectations in terms of being able to make money
and where by and large customers still turn up in large numbers.

Arguably,
the absence of the much maligned ‘clone’ multiple retailer and its
replacement with an alternative local retail entrepreneur who is
focused on customer service, neighbourhood needs and community
involvement can only add to the vitality and viability of these
locations.

Obviously, there is still some work to be done.
Landlords need to continue to approach portfolio management with
innovation and flexibility, while retailers and town centre managers
need to keep both eyes and ears open to keep ahead of the game and spot
the right opportunities at the right time.

Now is the time for
local retailers to capitalise on a great opportunity to secure prime
property at reasonable cost by knowing the lie of the land and not
getting lost amongst the crowd.