H/T to Paul Lockett

Auntie has an interesting article on commercial vacanies. As a barometer for the economy, empty shop space has some merits as a measure, because space being utterly wasted is a sign that something is drastically wrong.  It’s interesting though to see people’s reactions to it:

  1. The British Retail Consortium, who suggest lowering Business Rates.
  2. A landlord who cuts the rent in half.
  3. The British Property Federation, who suggest allowing residential use.

The first thing to say is that (1) is essentially asking the government to do a lesser version of (2).  Business Rates, being a property tax, is essentially rent.  Thus both the BRC and the landlord correctly spot that “the rent is too damn high” but the BRC, misunderstanding the nature of rent, back the wrong horse.

The story of the landlord is instructive.  The previous landlord(s) were holding out for a rent that was simply unreasonable, evidenced by the vacancies.  It took a new landlord getting the sites at a ‘reasonable price’ (enabling him to charge a reasonable rent) to get the sites into use.  The article doesn’t say what caused the previous owners to finally sell up, but a possible scenario would be bankruptcy.  I mention this to point out that bankruptcy doesn’t make actual stuff disappear, only the debt relating to it.  This is why banks don’t need bailing out, ever.

More to the point though, this story illustrates quite clearly that the main thing holding back the high street is incorrect pricing of the high street and to the extent that the cost of holding a site out of use is not paid by the witholding party, then this silliness will continue.

With regards to point 3, it raises an interesting twist.  Many people assume that the town centre is where shops should be, but how can we know that if we actually forbid people from doing anything else there?  Maybe the town centre’s days as a shopping hub are over and shops would be better placed elsewhere.  Maybe trying to force our model of land use is making things worse.

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