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Retail leader: sector's stress enhances councils' commercial role

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There are “huge misconceptions” about some councils’ property investments, according to the new president of retail property body Revo.

These misconceptions not only relate to the level of risk councils are exposing themselves to, but also the scale of out-of-borough investments.

Research Revo commissioned earlier in the year found that just £600m of £3.8bn invested by councils between 2013 and 2017 related to shopping centres, and all of those purchases had related to sites within each local authority’s area.

Mark Robinson, who is co-founder and property director at Ellandi, a leading investor in UK community shopping centres, said there was “a lot of heritage in councils investing in their town centres” and added there was a “huge range of motivations” as to why there has been a surge in councils’ commercial investment activities.

He said the councils he was aware to be investing in this way were generally buying up sites to promote regeneration projects in their own areas.

Mr Robinson, who became Revo president on 1 December, said: “Generally speaking people seem to be taking sound advice and they are doing a lot of deep-thinking [about investments] and really assessing what the opportunity is and the strategy they are trying to effect.

“Purchasing something because the price looks good is not a strategy, but that doesn’t happen. The investment we are seeing is very purposeful.”

Revo chief executive Ed Cooke said private investors have previously argued councils are “paying too much” for certain investments, but Mr Robinson said councils can take a “longer-term view” and settle for “a longer payback time”.

While Brexit has “undoubtedly” hit consumer confidence, Mr Robinson warned there will be “further stress and structural change” within the retail sector due to consumers’ changing spending habits.

“But if there is structural change going on there is a valid role for local and national government to be helping to facilitate that change, whether it be through enabling or full interventions by being the main owner and driver [of a property or site],” he said.

Mr Robinson said “clone towns” in particular are “suffering”. He urged every area to “find its own identity and really understand what its true purpose is” and then “relentlessly go after” that.

While Mr Robinson welcomed chancellor Philip Hammond’s £675m fund to help redevelop Britain’s high streets, he said another Budget announcement to cut bills by one-third for retail properties with a rateable value below £51,000 was “marginal”.

He also expressed concern about mostly funding councils through business rates.

“Those who are least well able to encourage investment are often the places that need the most investment so it sort of falls down from that point of view,” he said.

Mr Robinson also cautioned against another Budget announcement to expand permitted development rights so town centre shops, as well as offices, can be easily transformed into housing.

“If we think we’re going to solve the housing crisis by converting a load of ground floor shops into crap flats that is not the answer. But if we can use [permitted development rights] to rezone and reprioritise areas then that starts getting quite interesting and that is where we can start bringing in proper public-private collaboration,” he said.

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