It's nearly a year since the Scottish Government unveiled the National Town Centre Review with various recommendations designed to revive Scotland's ailing town centres.
Good intentions, but, as with a lot of research, there's a danger it could gather as much dust as many of the empty properties on the High Streets.
According to our latest Scottish Town Centres bulletin, while the economy is showing signs of recovery, the retail sector still faces challenges in delivering new projects. With a cautious developer/funder and occupier market still prevailing, the volume of floor space in the Scottish pipeline is now at its lowest level in the five years we have been producing this annual report.
While it is true that the economic impact has affected the build-out rate, our data shows that those town centres that have dared to invest and innovate have reaped the benefits: the Elements in Livingston, Union Square in Aberdeen and Glasgow's Buchanan Street are all thriving. Still in the pipeline are Glasgow's Buchanan Galleries and Dundee's Overgate extensions along with the St James Centre scheme in Edinburgh.
As part of our research we gather information from all of Scotland's local authorities on their strategies to take projects forward, but, too often these are not proactively developed. Local authorities and private investors need to critically appraise their prime areas for investment as these retail and town centre pitches are crucial to economic recovery. The old adage that you start with prime is particularly true in the current climate. Some town centres might have to shrink this to achieve the best deals as it's important to invest where footfall is strong in order to attract retailers and further investment. There are also opportunities for offices, leisure, culture and residential use to make their way back into town centres, and central government needs to do more to encourage the public sector to relocate these services in the High Street.
We're working closely with our clients to open up fresh areas of discussion with local authorities on new funding mechanisms.Increasingly, developers are moving away from the traditional model of up-front bank loans into arrangements such as Tax Increment Financing (TIF) and Prudential Borrowing. The TIF route involves the public funding of up-front infrastructure costs against a ring-fenced return from future additional business rates yielded from the added value of the new development. Prudential borrowing has also been implemented by a number of local authorities where they provide an up-front loan to enable the 'leg-up' infrastructure to be secured. This is then paid back by plot or by unit from the developers benefiting from the scheme.
Both of these schemes enable developers to meet the first phase of delivery with a safer route to 'pay-as-you-build', and there are signs that such measures are already generating movement in the Edinburgh and Glasgow markets. For public providers of finance, these risks have to be balanced by the ability of the property market to help identify and select the most likely build-out sites. By taking this risk on board, local authorities require their planning departments to be more focused when it comes to selecting good prime sites. Lesser sites will add risk and create uncertainty around completions. Furthermore, land-use development plans and master plans have to work as hard at making delivery work by new means of funding and infrastructure, as they do at creating visionary designs.
There is no doubt that there are challenges ahead for property and planning interests. However, we believe people are social beings and that it is possible to make city centres more attractive and enjoyable to use and visit. The imminent publication of the new Scottish Planning Policy and National Planning Framework 3 is an opportunity for central Government to set the agenda. Equally, local Government, with the help of the Scottish Futures Trust and Scottish Enterprise, needs to ease delivery mechanisms to ensure projects in the pipeline move ahead quickly and smoothly.
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