“ From an investment perspective we can see plenty of retail opportunities with housing potential embedded in them”

shopping centres, including the St Nicholas in Sutton, Surrey and The Bridges centre in Sunderland.

“For us it’s all about picking stock carefully and then actively managing it,” says McIsaac. “If a retailer chooses not to renew their lease, we’ll plan what the next step’s going to be to ensure that the building’s value is maintained.” Options can include outright sale (such as in Coventry, where a property was traded on to a student housing developer) and partial redevelopment. In Sheffield, for example, former office space above retail unit on Fargate was sold for development as student housing.

McIsaac acknowledges that some of the retail properties in AEW’s portfolio may ultimately not have a future as shop units, but says that this is simply a reflection of the gradual change taking place on our High Streets, partly as a result of online shopping.

“The fact is that these days we don’t need so much stuff”. Brandishing her iPhone for emphasis, she adds: “I used to need about 10 different devices in the past to do everything this does – now it’s all in one little gadget.”

While some see the resulting retail retrenchment on the High Street as a bad thing, McIsaac isn’t one of them. “I see it very positively – there’s an opportunity to return a lot of town centres to a genuine mixed-use setting,” she explains. For that reason, she is particularly enthusiastic about the possibility of extending permitted development rights to the retail sector. PDR had a profound impact on the UK office market as they allowed the change of use of many redundant offices to housing without protracted planning negotiation.

“I’m strongly in favour of a more relaxed planning regime. If we can get more residential space in town centres that will take pressure off building on the green belt,” she observes.

“And from an investment perspective we can see plenty of retail opportunities with housing potential embedded in them. For example, I was recently looking at a retail unit that includes a huge block at the back which would be perfect for conversion to residential use.”

In the absence of permitted development rights for retail, AEW will apply for a change of use through the normal planning process where it believes the change is warranted, though a successful outcome is by no means guaranteed. Earlier this year the firm’s attempt to create six flats above a High Street bank in Portsmouth, Hampshire, was flatly refused by planners, who insisted on preserving employment use at that location. Further along the coast in West Sussex, however, AEW is more confident of support for its proposals to create around 40 apartments above an existing shopping arcade in Brighton.

McIsaac is optimistic about the general direction of travel for core retail uses.

“Fundamentally there is a future for the High Street, but it’s based on more than just shopping per se, it’s about making it fun. The challenge for landlords (including us) is adopting this evolving ‘Instagrammable’ festival culture and working with retail partners to make a really exciting experience for customers.”

Browse | Q3 2018

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