Infinite Global’s Tal Donahue caught up with Alexander Lewis, Partner in the Residential Development team at property consultancy Knight Frank, to discuss the changing dynamics of the high street and how placemakers can be encouraged to take a long-term vision to create sustainable places.
TD: Welcome to the infinite global podcast. This edition is part of our series on placemaking and place storytelling, a topic that continues to be front of mind for the property industry as we grapple with issues from the housing crisis, to the revolution in the retail market, to the growth of smart cities. My name is Tal Donahue and I'm delighted to be joined today by Alexander Lewis partner in the residential development team at Knight Frank.
Alexander welcome. Can you just give us a quick overview of yourself and your background in your role at Knight Frank?
AL: I've been working now night Frank since 2003 with a focus on residential development from central London which is typically zones 1 and 2 advising developers on how to make the most out of their assets and also selling land to developers.
TD: And we're here today talking about placemaking. It's a very big term and a term that's been around for a long time at least since the early 90s. I think that was when the Project for Public Spaces started using it and brought the term into wider circulation. The definition has come a little bit murky over time and there's disagreements about whether it's just a tactic to get schemes through the planning system or if it's a more fundamental, more strategic approach to the built environment more generally. How do you at Knight Frank use the term placemaking? What does it what does it mean to you as an organization and yourself as an individual?
AL: Well there are sort of two elements to that. The idea of placemaking is creating an area that people want to spend time in. It's really that simple. They fall into different categories: There are people that are just passing so you tend to get those around transport hubs. There are people who are local to the area and then there are people who go there specifically to be there. You have succeeded if people are spending time in your development because it's benign and it's a welcoming environment. The second part of that though is the value that the creation of a sense of place drives to the uses within it, specifically in my instance residential. If you're designing a scheme with many phases it is in your interest to create a sense of place not only to drive the residential values above, but also because you're going to commit to years and years of development and phases to increase values across the entire development, which is exactly what they've done at King's Cross. Starting at about eight hundred pounds per square foot and I think we're as high as two and a half thousand pounds per square foot at Gasholders.
So it's about creating a nice place but also understanding how that drives value. I think increasingly in the current environment, a sense of social responsibility is starting to feed into that as well, which is driven by the planners and the estates of London. How do we create sustainable environments? How do we create an environment that is going to impact on our wider holdings within the area?
You only need to look at the value impact of Marylebone High Street, the value impact of Duke of York's Barracks Square in Chelsea and what Cadogan have done there. The value impact of what Grosvenor do around Elizabeth Street and on Mount Street and specifically I would say as well what The Crown (Estate) have done on Regent Street and in Soho. What's been done on Regent Street will last for hundreds of years in terms of the vision. At one level there is there is a sense of 'let's try and make some money', but also 'let's try and make this last forever'.
TD: How do you meet the challenge when those two aims don't necessarily coincide? There are lots of developers out there and lots of property owners who don't have the long-term vision yet. They may be moving towards it but it's not there yet, either it's not part of their economic model, or they just don't have the initial capital to make the required investments up front in infrastructure in the public realm for it to make sense to them economically. At the same time we have data now that shows that good investments in placemaking at an early stage have long term economic benefits. How do you encourage that kind of upfront investment when you don't have someone in place who has a long term vision and is more enlightened than others?
AL: Unfortunately it really comes down to money and this is something I think the Government struggles to understand, especially when dealing with developers. You can't make someone do something that makes them lose money. You simply can't do it. Where you've got estates with a long-term vision with huge acres of land that they have a very long-term interest in it's much easier to create sustainable places. The problem we face is that at some point the Government has got to bite the bullet and say ‘look, if we want people who don't have these long-term interests, if we want to encourage them to create sustainable places, we're going to have to put our hands in our pockets.’ They can't make developers lose money, they're just not going to do it.
The same extends to the housing crisis. You see sites just sitting there empty because the planners, or whoever it is, made it unviable to do it. I think there needs to be more cohesion between the Government and developers.
There's a huge suspicion between the public and private sector at the moment and where they don't work together things just aren't getting developed and it's no coincidence in central London that things take so long to do because of this lack of coordination. If when developing a site you had to choose between creating a really dense scheme that wasn't going to make a very nice place to be, or a much less dense scheme with a nice square that didn't make any money, the developer is always going to do the dense one. That's when the Government needs to step in and say 'look, we'll give you planning for the denser scheme but actually it's in the long term interests of this country and of this town, to have a more sustainable, residential, mixed-use environment, so we are prepared to put our hands in our pockets to help you do this.' The problem is that they won't do that at the moment. At the moment they're just trying to squeeze the lemon till the pips squeak and it's not working.
TD: And yet at the same time we've also had various committees set up by central Government. We've had the APPG on building communities and a new taskforce put together on improving the design of the built environment, so they're clearly putting built environment design at the centre of things. But at the same time is the planning system allowing for that kind of approach to be taken? I was speaking to an industry contact the other day and they were positive that tighter planning regulations are actually needed to give developers the stick to coincide with the carrot and get building.
AL: I was writing an essay about the housing crisis and I spoke to 50 different developers, consultants, architects, builders and actually very few of them blamed the planning system. The planning system grants certainty, it's where is where you have uncertainty that the problem exists.
The problem with the planning system is not necessarily regulation, how long things take and how expensive that makes it. To me the problem with the planning system in central London is that it can treat huge areas with vast vastly different demographics under the same planning policies. You're trying to do a ‘one size fits all’. Let's take it a really simple example with guidelines on unit sizes. You can't go smaller than 50 square meters for a one bedroom flat. Well I can demonstrate to you that if you were to get 40 square meters, you're going to get a lot more flats built, they're going to be a lot more affordable and they're going to be what people want to buy.
TD: The challenge is that at the moment the various kinds of regulation stymie the bringing to market of new concepts and new products. For example, co-living is quite difficult to bring through the planning system because of space requirements and yet there's clearly a market for it and there's a need for it in places like London where the whole work life balance is shifting. People want different things from the various places in which they reside.
AL: I think that's a really good point in terms of placemaking. At the moment, I wouldn't say we're at a tipping point, but definitely in a period of great change both in terms of how business is changing because of the Internet and how retail is changing through technology. The youth coming up and they're used to very different things. What we have at the moment is quite damaging because we have the people making the regulations come from one generation and the people who have actual requirements come from another generation. We're in a period of transition at the moment in terms of designing things that are fit for purpose.
The big one for me is how the Government deals with retail. The Government, and landlords, need to recognise that high street retail is now high street leisure. Retail used to be a convenience thing where you'd go out and buy your clothes or your food. You don't do that anymore, but people do like the experience of shopping so they will go and they will take the day to go and have lunch and go and buy a few things. The reality is they'll probably buy their staples online or in a big supermarket out of town.
TD: There seems to be a polarisation of the retail market between convenience, or experience-led and that that's actually really interesting from our perspective coming at this from the point of view of branding experts. How then do the retailers create those experiences which lock customers in to their brand and make them want to increase the dwell time, increase the buy-in to the experience that that brand is delivering? That's fundamental to the future of the High Street.
AL: My understanding is even on Oxford Street, which is essentially London's billboard for international brands, there are now some brands that are saying 'do you know what it's just too expensive, it's not worth it'. You know they might just literally buy a billboard, they don't need to rent a huge store fill it full of staff and not do any turnover. What's quite interesting is when you go into some of these shops and they don't have the item you're after in stock and they're caught between the transition from a high street shop selling things and an internet based business where they're in that interim period. If that happens you just don't go back, you'll just buy it online. We need to move to a position where the high street is where you window shop so retailers can take a tenth of the space and fill it with an example of every single product that they've got and you then go ahead and buy it online.
TD: We've spoken to a couple of clients about that and I think one sub-sector where we are seeing this being rolled out is the automotive sector. You've got Tesla for example taking space in Westfield and Bentley have a high street showroom. I think that's where you're seeing retail as a whole moving towards the high street being a showroom operation which is integrated with technological platforms to enable fulfilment of the customer's order. So you go into the store you see what you like and you might interact with the brand on a app or a customer service operator to order the item that you want. It doesn't matter if you have no stock in the store but it's all in a fulfilment centre somewhere and when you get back home as it's delivered. I think you're starting to see more retailers more brands going down that route.
AL: Ironically Argos is so ahead of its time because it does exactly that. You can you can go in and look in the catalogue and just place your order and pick it up. The problem is that principle takes away from the leisure experience.
For these high streets to survive there are a number of key elements. Firstly, is how easy is it to get to these places? If you're at King's Cross it's a bit of a no brainer. If you do need people to travel to where you are then the idea that you then charge them through the nose to pay for parking is anathema, an absolute paradox. If you look at Westfield, they offer the cheapest parking in London at six pounds a day, so everyone drives there and they're doing brilliantly.
A completely out of town example is might my local town Thame. Thame has won the high street of the year award in Oxfordshire many years in a row because the parking is free, it's really that simple. I shop on the high street there because it's an experience. I get to have lunch with the kids and then we pop into this shop and that shop. There's a sense of responsibility because if you don't shop then the shops go. So there does need to be a bit of a sense of community.
We need to actually take a decision whether we want to save our high streets. If a landlord has a decision between putting in a big brand or a local independent the brand is going to make more money. We know what the landlord is going to do. So that's when the Government needs to step in and say 'well hang on, what if we were to help you here? What if we were to make up the difference?' The Government have got to decide at some stage, in conjunction with the landlords, do we want to save the high street? And how do we do that? Do we want to give parking away for free? Do we want to bring business rates down? How can we do this?
I think one of the greatest threats to London as a city is the death of retail. No one likes seeing an empty shop and once it's not fun to be there people won't go. I mean you look at Kensington High Street as a very good example of that. Because you don't have that estate management you've got probably five or six major landowners along that high street but there's no coordination. They sell assets off as and when they need to but they're very much focused on a short-term view. There's no coordination.
The exciting one for me at the moment is a Queensway. For the first time in many years you're starting to see some coordination between four big landowners on that street with Westminster backing them in terms of the public realm. Queensway over the next five years is going to change immeasurably and it's going to become Marylebone high street. So you can imagine what that's going to do for residential values there. You've got the Bourne family who are already at the south end, Barry's Boot camp has gone in, they've redone the bowling alley and there's an ice rink now that you can actually go carting on which is quite fun. They've got they've got a Meat Liquor in there and have really had to think about who's going in to the high street. You go further down you're going to have the Gibbon family who also redeveloping an entire parade. You've got Meyer Bergman with Whiteleys and at the top you've got the Park Modern scheme.
So you've suddenly got four big players who are all committed to the area and that's going to make a major difference. In addition, you have Westminster saying, 'with all the Section 106 monies for these developments we're going to completely redo the street'. They're going to narrow it, they 're going to widen the pavements and make it brand new. They’ve got the same architects at Exhibition Road. They're taking the parking off the street so it basically becomes just traffic going down they're going to encourage interaction between cars and pedestrians. Look at the Exhibition Road, you can argue whether that was a good way to spend money but the reality is it's created something really quite interesting. When making these places someone's got to have a long-term vision and someone's going to stick their hands in their pockets. It's not always easy to do and especially not when you've got uncertainty like Brexit hanging over you. The Government, whether they're Labour or Conservative, they need to be working with developers not against them to create these solutions.
TD: Your point about retail and the future of the high street made me think about some of the conversations that we've had with various business improvement districts such as the New West End Company. How far do you think business improvement districts are a useful tool, are they underutilized or is there a better system? Or should developers start jumping into business improvement districts along with the along with the occupiers?
AL: The reality is you can create a district and you can fund it but is it sustainable? Is the money going to stay there? Is there money surrounding it? Are the transport connections there to actually sustain it? You can find districts in boroughs around London where they’ve got that fabulous transport connections but the reality is that the demographic will support the lowest common denominator business model. Each example needs to be treated on its own merits. I've never believed that brand in isolation will rescue a poorly conceived idea.
Let's take Landsec's Nova scheme as an example, which is a scheme I worked on. Landsec as a long-term stakeholder there took the decision that they were going to create a district that was fun to be in and they weren't going to fill it with high street stores but rather to independents. It really is great what they've done there but at the same time they've really supported the office market. They have created something great. If Nova was full of generic high-street stores then Nova would mean nothing. But Nova is actually really cool and it’s a name they can now be proud of. But the name on its own is meaningless without the product behind it and it's exactly the same with residential property.
TD: What is Knight Frank's approach to place branding and the PR that sits alongside that to start building the reputation of the places that you're promoting?
AL: I've always been quite sceptical about the value of a brand on its own. Let's take Nova as an example, which I worked on since 2010. When the name was first mooted I think we were all a little bit sceptical. I think you can call it what you want but you can't polish a turd. And to the same extent, if something is located on Belgrave Square you can call it 4 Belgrave Square. You don't need to try and ‘jeuge it up’ quite frankly.
When we do use branding what we're trying to do is imbue a sense of quality that that that shines through in the product. The reality is that sometimes people will just buy location no matter what you call it, or they will buy product no matter what you call it. The whole branding thing really took off with One Hyde Park and The Knightsbridge was 199 Knightsbridge. Before that it was 10 Montrose Place. It was just the address, that's what we did. And then Candy & Candy brought in this concept of actually bringing a bit of branding to the product. One Hyde Park was born and since then everyone has copied it.
What we are seeing feeding into the buying pool globally is that people are increasingly buying a lifestyle when purchasing a flat. In that respect there is value in the brand.