A change in the high street - the hub and spoke approach?

From my experience, themes have been largely consistent, though one theme (which has been mentioned by some, but by no means all) really has caught my attention: what will happen to the high street (post COVID-19). This topic has been discussed ad nauseam in recent months, even years, when we have witnessed the demise of small businesses and retailers, largely due to extortionate business rates and online competition. There has been a great deal of commentary about residential and leisure uses taking over from the more traditional retail use, but the latest chain of thought is different, and could just prove to be a success, for more reasons than one.

Whilst the lockdowns have been difficult for many, they have come with some upsides, and may just act as a catalyst for change. For the majority of us, the lockdowns have given us time to take stock and to work out what really matters. Most of us enjoy the office environment, but commuting is a bore; it is expensive, time consuming and often unpleasant, and there are far better ways to make use of that time: exercise, another hour of sleep, enjoying a hobby, spending more time with family, reading, or even using the time to log on early and get ahead of the day’s work. Mental health and wellbeing are big on the corporate agenda, and reducing a commute allows us the time to do something for ourselves.

Many corporates have circulated surveys to their staff to understand how people are dealing with lockdown; the positives and the negatives. The general consensus appears to be that the office environment is very beneficial but being in the office (in Central London) for five days a week may no longer be necessary or desirable. Common themes as to what people have really missed from the office experience revolve around the insufficient social interaction, difficulties with supervision and access to equipment (scanners and fast and efficient photocopiers). Downfalls with working from home include lack of space, inadequate equipment, poor broadband / phone connection and the inability to build relationships. Cue the new chapter of the high street.

The talk amongst the experts now is the rise of the “hub and spoke” office model, put simply, a (smaller than current) hub office in Central London and the rise in the demand for smaller “spoke” office space in commuter towns (the likes of Sevenoaks, Guildford and St. Alban’s being good examples where the hub office is in Central London). For many corporates, an HQ in a UK city still has its place. It will continue to play a key role in hosting client meetings and seminars and training our workforces. Research has also shown that a swanky office with “experiences” (gyms, swimming pools and roof terraces) will still be required to attract the best talent. But after the latest lockdown ends, office workers may just be looking for more.

The place to provide what is required by the post COVID-19 office worker could be the high street. Why? The advantages are numerous: there is surplus space available and therefore it would be an excellent way to reinvigorate the high street, utilising redundant space and bringing more people to existing services. Rents per square foot are lower than Central London which would, in the longer term (once businesses potentially downsize their Central London requirements) reduce costs for corporate occupiers. Demand for public transport would decrease (making it a more pleasant experience for those who do have to travel) and reduced journey times will also play their part in increasing sustainability and benefitting the environment, which, like mental health and wellbeing, are high on the corporate agenda.

You may well ask why a spoke office would be preferable to working from home. From an employee perspective, the commute would be significantly less time consuming and expensive (it may even be a gentle stroll) but the benefits of office space would still be very much available.  All of the challenges of working from home (including the concern that working from home is really only an option for the privileged few) would be addressed, with the provision of fast broadband, state of the art equipment and other colleagues on site to offer that collaborative experience and supervision. From an employer point of view, there are data privacy and health and safety issues to consider. It is preferable for businesses to have work materials in a controlled environment (with access to commercial shredding machines) to enable compliance with data privacy legislation, rather than confidential papers being present in a home environment. Employers also have a duty of care to their employees in relation to their desk set up. This duty applies when working from home as well from the office. It is of course easier to manage and monitor that duty in an office environment when frequent desk assessments can be undertaken.

This all sounds like a sensible solution but it will come with its challenges - planning permission for change of use is likely to be an initial hurdle. However, following the Town and Country Planning (Use Classes) (Amendment) (England) Regulations 2020, which came into force on 1 September 2020, a new Use Class E has been created which subsumes previous use classes A1(Shops), A2 (Financial and professional services) A3 (Restaurants and cafes) and B1(Business) and new permitted development rights have been created which permit various temporary permitted changes of use to other use classes, including office to retail (and vice versa).  This flexibility is going to remain in place until at least 31 July 2021 and so should enable property owners to adapt more quickly to changing market demands by offering buildings to tenants or occupiers for a broader range of uses without the need for a lengthy planning process.

For those landlords who are now staring down the barrel of empty retail space due to the tragedies of COVID-19,  or for tenants who simply do not need to spend hundreds of thousands on prime rents in Central London, because they have learned that it is possible to work remotely, perhaps there may be opportunities elsewhere?

Please do contact Emily Meredith Hardy if there is anything we can do to assist.