Store vacancy: A golden opportunity for transformation


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by Huib Boissevain

Owner Annexum

[In Nederlands]

The shopping streets are not doing well. In city centres and inner cities, shop premises are empty. And retailers are increasingly confronted with a shift from physical sales to online sales due to the corona pandemic. Due to the persistent and long-term vacancy rate, the risk of decline in shopping areas is high. Transforming retail properties seems like a logical next step. How do we bring life back to the shopping streets?

More and more retail properties are vacant in both large and small cities. According to figures from retail real estate researcher Locatus, the vacancy rate at the beginning of 2021 was 7.3%. Research by the Netherlands Environmental Assessment Agency (PBL) and Locatus also shows that the current corona measures reinforce an important trend: the decline of recreational shopping or ‘fun shopping’ in inner cities.

The supply of shops in city and village centres is expected to decline in the coming years, resulting in higher vacancy levels. PBL even expects an increase in vacancy to more than 40% in 2022.

I don’t think it will actually get that far, but I do believe that we should already proactively look at the possibilities for transforming vacant stores.

Transformation of stores is difficult. Vacant properties are often spread over the shopping area and the ownership of these properties is fragmented. To tackle the problem of vacancy, all empty buildings should be brought together in one place in the shopping street, so that large-scale transformation is possible. Municipalities must take a leading role in this because real estate owners and tenants are very different.

Living in the shopping street
The ever-increasing store vacancy, therefore, provides food for thought. When you merge several empty stores, you can transform them into homes, for example. Due to the current housing shortage, this is therefore being done ever more often and: successfully. The mix of living and shopping increases the social quality of life in the city centre.

The city centre is an attractive residential area, especially for single households, students and the elderly. Transforming shops into homes will therefore benefit many.

The return of the manufacturing industry
Long-term shop vacancies are also an excellent opportunity to return the manufacturing industry to inner-city areas. Think of the shoemaker and the sewing workshop. To achieve this, rents of retail premises will have to decrease slightly, although in many inner cities, retail rents have already fallen to such an extent that the manufacturing industry can return. In addition, the return of the (environmentally friendly) manufacturing industry with, for example, sculptors and furniture makers will ensure a diverse and inspiring street scene. The shopping street will come back to life and become an attractive area to stay.

Take advantage of the mix of functions
Vacant shops are also increasingly being converted into catering establishments. In the past, inner cities have shown they can adapt to changing social needs. After the economic crisis of 2008, shops disappeared and more catering establishments entered the city centres. This trend continues.

In 2020, nearly 7500 stores will be transformed to a different function, the majority of which will be towards catering. However, care must be taken not to convert shopping streets into so-called ‘catering streets’, something that is often the case in inner cities. One should be more concerned with the overall function mix, where catering is only one of the functions.

I also suggest that inner cities could support working from home better. For example, at FlexOffiZ we notice that in larger city centres, there is a considerable need to work closely to home.

This prevents travelling and working in an office location that is uninspiring. That is why we have now started testing office locations in Amsterdam and Breda, where people can work within walking or cycling distance of their own home and in a safe environment – with the tranquillity of a normal office.

Store transformation enriches the city centre
Bringing back the functions of housing, culture, work and catering to the shopping street in a balanced way, will increase the appeal of inner cities. To continue to receive enough shoppers, the focus must be clearly on inspiring the customer in real-time, which is not possible online. The continuing vacancies offer a golden opportunity to revitalise shopping streets.

Zoning should be expanded proactively, so action can be taken immediately in the event of vacancies. An empty shop is like a set of teeth where a front tooth is missing.

Redevelopment, cooperation and write-down of real estate value are by no means easy obstacles to overcome. But pilot projects show that it is possible. For this reason, it is important that all parties – retailers, property owners and governments – proactively enter into discussion with each other about how they can optimally use the potential of the vacancies in shopping streets. Because with the right implementation, shop transformation enriches the city centre.

Huib Boissevain
Owner Annexum

 

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