As we emerge from the chaos of Covid-19, the high street faces new challenges - but our new, hybrid world of work offers exciting opportunities, too.
As many countries slowly emerge from the disruption of Covid-19, its effects on the way we live and work are becoming clear.
The crisis has accelerated many changes that, previously, seemed like slow evolutions. Notably, long periods of lockdown have hastened the so-called ‘death of the high street’.
While retail vacancy rates have been rising for several years, they hit a new high of 14.1% in the first quarter of 2021. This figure represents a rise of 1.9% year-on-year, and means that roughly one in seven shops now sits empty. Some of these still bear the logos of well-loved household names such as Topshop, Debenhams and John Lewis Partnership.
It seems that the new, post-pandemic world will pose even greater challenges for retail businesses. However, the high street may have life in it yet, especially if landlords are quick to seize the opportunities that regeneration presents.
The multi-functional high street
For retail landlords, a key question in the aftermath of Covid-19 is what to do with empty units.
It’s a sign of the times that John Lewis Partnership recently announced plans to build 10,000 rental properties. Of these, 7,000 will be on sites that are already part of John Lewis’s existing portfolio.
In a similar move, the City of London Corporation, which looks after the Square Mile, is aiming to create at least 1,500 new homes by 2030, converting empty offices into homes in a bid to revive the area after the effects of Covid-19.
Across the pond in Napa Valley, IWG’s Spaces brand recently opened a brand new kind of flexible workspace – one that’s set in a bustling downtown development rather than a traditional office building. Surrounded by shops, restaurants and leisure facilities, Spaces Napa makes the area a true ‘live, work and play’ zone.
The presence of a richer mix of amenities on British high streets will help to reinvigorate footfall, stemming its historic decline and supporting business of all kinds.
‘Livable towns’ and ‘the 15-Minute City’
The ideals of ‘livable towns’ and ‘the 15-Minute City’ have made it on to government agendas worldwide, with the UK’s High Streets Task Force focused on supporting transformation efforts. Developed by Professor Carlos Moreno at the Sorbonne in Paris, the 15-Minute City concept seeks to improve quality of life by creating neighbourhoods where everything a resident needs can be reached within a quarter of an hour on foot or by bike.
In Brighton – a city already embracing the idea of living, working and playing locally – IWG collaborated with the Advance Strategy Practice of global design and consulting firm B+H to create a vision of what the future might hold. Key to the success of the 15-Minute City ideal is the presence of places in which to work as well as relax.
“We need to have great flexible workspaces available within a 15-minute circle of where people want to be,” says Doug Demers, Senior Managing Principal at B+H. “There’s tremendous opportunity for entrepreneurs.”
The rise of hybrid working
Covid-19 has had a transformative effect on the way people work, as well as the way they shop. Significant stretches of remote working have awoken businesses to the benefits of a hybrid approach for people, profits and the planet.
Global firms such as Standard Chartered and NTT have committed to hybrid working for the long-term, recently partnering with IWG to offer their people bases closer to home.
Demand for IWG’s flexible workspaces in suburban and rural areas grew by 32% and 20% during the first quarter of 2021, compared to the same period pre-pandemic. Conversely, demand in city centre areas was down 11%.
Flexible workspaces have a vital role to play in revitalising high streets, as well as achieving planning ideals. Their development in former retail units will help to meet demand for local places to work, as well as create a market for cafés, restaurants and shops nearby. What’s more, flexspaces don’t have to be huge to be profitable: units from 5,000sq feet to 20,000 sq feet can offer impressive returns for landlords, depending on their location.
Unsurprisingly, IWG’s franchise development programme is already building serious momentum. It has seen a 350% increase in new locations signed up by franchise partners in the first half of 2021, compared with the same period last year. A total of 20 new franchise partners have joined IWG in the past six months, and these will see more than 110 centres developed in locations around the world. Meanwhile, research by IWG among 501 business leaders with an interest in franchising found that 56% were considering becoming a flexspace franchisee – the highest figure for any type of franchise opportunity.
IWG’s scale and heritage make it the ideal choice for many landlords and franchise partners looking to break into the sector. Founded over 30 years ago and with more than 3,300 locations across the globe, it offers a variety of workspace brands that cater for different types of customers all around the world.
Looking to the future
Mark Dixon, IWG Founder and CEO, argues that while Covid-19 has had a “dramatic and permanent effect” on the way people work, “it’s merely accelerated a trend that’s been under way for several years”. Likewise, the high street’s problems pre-date the pandemic. According to analysis by PwC and Local Data Company, the net loss in chain stores has increased every year since 2015.
Large office complexes and shops face the same challenge: the unturnable tide of technology. Hybrid working is easier than ever before, so it’s no surprise that, as Dixon puts it, “herding people to the office is looking increasingly obsolete, expensive and inconvenient”. For consumers, the web has provided an alternative to shopping on the high street. The proportion of total retail sales accounted for by online purchasing hit 36.6% in January 2021 – up from a mere 7.1% in 2010.
All in all, a mass return to the shops seems as unlikely as a full-time return to the office, but that doesn’t have to spell disaster for high streets or landlords, if they’re willing to embrace a new era. “The future of work is with us today,” Dixon insists. “And it’s only going to improve. Just when local cities and towns seemed to be dying, Covid-19 may have come along and saved them. What were previously sleepy dormitory towns are set to become vibrant centres for work and community life.”
Flexible workspace is the fastest-growing sector of the global workplace market. Make the most of this exciting investment opportunity by partnering with IWG today.
