The Future High Street Fund- repurposing opportunities for developers and investors?
When the Government set up the Future High Street Fund (“FHSF”) in 2018, it could not have foreseen the outbreak of COVID-19 and the impact it would have on retail in general. Now more than ever, the high street is crying out for a lifeline to pull it out of the cycle of decline that has hampered towns and cityscape for the last decade.
In July 2019, long before COVID, an additional £325 million for the FHSF was announced taking the overall fund value to £1 billion. In light of the pandemic, this initiative may prove instrumental in the resurrection of the otherwise unloved retail and associated real estate sector.
What is the Future High Street Fund?
The FHSF was set up to support the development of high streets in a way that drives growth, improves customer and community experience and ensures future sustainability. It will do this by providing co-funding to successful local authority applicants to support transformative and structural projects to struggling high streets, including:
- investment in physical infrastructure; improving transport access, improving traffic flow and circulation, congestion-relieving infrastructure and supporting the use of technology as part of the smart city agenda; and
- investment in land assembly, including to support the densification of residential and workspace around high streets in place of under-used retail units.
Successful towns can secure up to £25 million of funding for their plans, but most projects are expected to be in the region of £5m-£10m.
The funding selection process is well underway with final detailed submissions from the shortlisted towns now in and with successful bids expected to be announced later in the year.
Aims of the initiative
One of the key aims of the FHSF initiative is to devolve decision making away from Whitehall to the regions and empower the local leaders to unlock resources; the idea being that local knowledge should foster better investment of capital.
Successful bids will have to demonstrate that local authorities have secured shared funding and support from local stakeholders and private sector partnerships. It is hoped that this synergistic approach at a local level will help solve some efficiency issues hindering regeneration.
Widely accepted as the biggest incumbrance to rejuvenation of areas in terms of planning and investment; is the issue of fragmented ownership -getting stakeholders to agree a way forward. Pooled ownership allows projects to go unhindered and vastly shortens timelines. This new FHSF focus does not present us with an immediate solution to all of the impasses of fragmented ownership but gives some clout and accountability to local councils.
With local authorities being both the planning regulators and the sponsors (along with private investors) of these projects, strategies should be closer aligned whilst red tape should be greatly diminished.
There are two distinct private investor groups with a vested interest in the FHSF: i) landowners with property in target towns; and ii) developers/investors looking to acquire such property. We can group these investor categories into “winners” and “losers”.
- “Winners” will be those who benefit from the joint-venture nature of the FHSF in that public/private interests will be aligned, red tape dropped and return on investment accelerated. They are likely those with closest links to councils already and most forthright strategic planners.
- “Losers” will be those landowners or investors who have poorest council/strategic planners– in particular, the landowners falling into this category may have their land compulsory purchased at a suboptimal valuation.
It is clear that a proactive approach from asset managers and landowners, within these potential development areas, needs to be taken to protect and boost the value of those assets. Where owners have significant stakes but no strategic advantage in the face of respective councils they should consider collaborating with stakeholders who do. As is always the case, those who show both deliverability and a long-term sympathetic interest in the community’s wellbeing at large will be viewed in the most positive light.
For those investors who do not hold land or buildings; they can afford to be truly opportunistic. The alignment of interests now means that previously un-investible vacant or struggling retail spaces may now become commercially viable. In all instances, developers should not only look at the FHSF’s interests unilaterally in these areas, but they should carefully research the Government’s infrastructure plans for the areas on a wider scale.
The Fund’s set up has brought possibly the largest injection of central government funding focused on high streets for more than a decade. With innovative and deliverable proposals, and the evidence in place to support them, there is now a real opportunity to bring forward measures that can help turn around and repurpose our high streets.