The Retail Note - The New London Plan: a high street shakeup, but a retail park shakedown?

Key Messages

• London Plan rightly supportive of high streets and town centres… 
• …but misguided in its jaundiced view of retail parks
• Refreshing recognition of the importance of high streets to London’s economy
• Acknowledgement that they need to evolve and not necessarily be retail-led
• Above all, must reflect and respond to local need, which will vary by area
• But ‘over-prescriptive’ in certain aspects and somewhat ‘nanny-state’
• Also, some misconceptions surrounding vacant high street units
• The narrative on retail parks far less positive
• Highlighted as being “low density” and detrimental to town centres
• Inference being that the space should be re-allocated to other uses
• Woeful misunderstanding of the retail warehousing (RWH) model
• Consumers shop OOT out of choice, not out of necessity
• London is demonstrably under-supplied in retail warehousing
• Focus should be more on how RWH can be integrated into local infrastructure.

Rightly supportive of high streets, wrongly dismissive of retail parks. There is more nuance than that,  of course, but that is the essence of the latest iteration of the London Plan from a retail perspective.

Sadiq Khan’s recent decision to rubber-stamp the proposed pedestrianisation of Oxford Street may have grabbed most of the media headlines, but the publication of the latest London Plan document stands to be equally transformational, certainly in the longer term and over a much wider geographical area, covering the whole of Greater London rather than just the West End core.

Context

The next London Plan will set out framework for how the Capital will develop over the next 23 years (2027- 2050). Its early consultation document, Towards a new London Plan (May 2025) outlines the ambitions of the Next London Plan and puts forward the policy ideas through which they propose to achieve these aims.

These polices will, in due course, help shape and determine development proposals for all planning applications across Greater London. The focus is firmly set on housing delivery, particularly within the next ten years (to 2037). However, alongside this, the Plan will consider infrastructure, employment, green space and climate goals.

Positive implications for Town Centres and High Streets?

The importance of town centres and high streets (and the inter-relationships between the two) are fully recognised in the Towards a New London Plan report, most notably (but not exclusively) under Paragraph 3.3. The overriding aim is: “[…] to help ensure that high streets remain a central feature of London’s economic and civil life. This must support town centre locations to adapt to a much wider range of businesses, jobs and commercial activity”.

There is full, rightful recognition of the need for high streets to evolve and a refreshing drive to embrace new thinking, rather than remain hamstrung by historic constraints. There is tacit reference that not all high streets need to necessarily be retail-led, as was maybe the case historically. Rather, the footprint needs to be diverse and encompass a wider mix of uses, and most crucially of all, reflect the needs and aspirations of the community that it serves.

Planning reform has already partially paved the way for this to become a more widespread reality. The introduction of Use Class E and permitted development rights has reduced or removed a large number of hurdles that previously stood in the way of meaningful progress and necessary change. This reform has provided a much more flexible framework to allow far greater fluidity between real estate uses, both commercial and residential.

Whilst supportive of the fundamental thinking and strategy, not all of the potential interventions proposed in the Plan are feasible or workable. As proposed, there is considerable merit in reviewing those high streets that are currently undesignated and encouraging them to either become part of a wider borough framework, or released for other uses. Either way, the net result will be a far greater sense of ‘ownership’, in both a literal and figurative sense. Without this requisite ‘ownership’, there is little impetus for change and these locations will continue to drift, rather than positively evolve.

Where the thinking goes awry

Some of the more ‘hands on’ interventions referenced are perhaps too extreme. Making moral-based judgements on the provision or restriction of “betting shops, pay day loan shops or hot food takeaways” surely exceeds the remit of a Local Plan and will draw criticism of a “nanny state” mentality. A Local Plan should not be a conduit to such subjective judgements on high street provision.

Equally, proposed actions on addressing the issue of vacant properties on high streets is somewhat draconian: “examples include new powers for high street rental auctions that give businesses and community groups a ‘right to rent’ long-neglected town centre commercial properties”.

This line of thought is predicated on the notion that vacant properties are being wilfully withheld from the market by unscrupulous landlords. The reality is much more likely to be they remain unlet because there is no demand to occupy them in their current form. The landlord does not want them to be vacant (and generate zero income) any more than the community or local authority does. The way forward must surely be wider engagement between landlords and local authorities to work together to resolve vacancy, rather than taking a purely stick-based approach.

While intervention can be positive, underlying market forces remain a great leveller and architect of change in their own right. On this basis, it would be short-sighted to be too prescriptive as to the constitution of a ‘perfect’ high street, by having fixed parameters (or even banded parameters) as to the optimum use mix on any given high street.

So, for example, it would be overly-prescriptive to advocate that x% is allocated to retail y% to leisure/F&B and z% to other uses. Such an approach contradicts the very ethos of creating high streets that are tailored and curated to reflect local needs and aspirations, which are going to vary dramatically according to location right across the Capital.

Diversity remains one to the key cornerstones of Greater London as a whole. That diversity percolates to the town centres and high streets that form its whole. That diversity can only be embraced and nurtured by a localised, non ‘one-size-fits all’ plan. Central guidelines perhaps, but ultimately devolved to local authorities and BIDs.

Retail Parks – an unwarranted bad rep

Retail parks are acknowledged in the Towards a New London Plan report, although largely in a negative context which undervalues the role that they play in London’s wider infrastructure. 

To highlight two examples, under Paragraph 2.7, they are singled out thus: “There is also a range of under-used sites such as low density retail parks and car parks, which offer potential for housing / mixed uses.” And under Paragraph 3.3: “There are parts of London, particularly in outer areas, that are poorly served by local shops and services. Some locations are dominated by out-of-town retail parks which provide shopping but not a functional town centre. This increases car dependency and has a particular impact on older and disabled Londoners, expectant mothers and families with children.”

The inference from these two statements alone is that retail parks are a detrimental factor, almost ‘force of evil’ for communities and town centres across the capital and the land they occupy would be better served by other uses, commercial or residential. There is very little narrative that is supportive of retail warehousing in the Plan, which is as short-sighted as it is disappointing.

To address the first of these references. To classify retail parks as “under-used sites” is based upon a visual rather than financial or factual assessment. By their nature, retail parks have low site coverage, typically 30% - 50% (probably more towards the latter end within London). This is because car parking is fundamental to their business model and is a prerequisite for any retail park site. To dramatically reduce car parking provision by reallocating it to other use classes would totally undermine what is a highly successful business model.

Secondly – and to speak to both references – most consumers actually like retail parks and they are shopping there by choice rather than by default, as is inferred in some of the Plan’s narrative. It is absolutely no coincidence that retail parks are currently the best performing asset class not just in retail but of any property class in the UK. In essence, this is the product of a virtuous circle – consumers like them, retailers make money from them, landlords and investors generate a decent income and return from them. They are more a force of good rather than evil.

Retail warehousing is demonstrably under-supplied in London relative to other parts of the country. Obviously, this owes much to the unique nature of the Capital, coupled with paucity of land, high land values and strained transport infrastructure. In essence, Londoners have less access to retail warehousing than consumers do elsewhere in the country. Rather than seek to reduce this undersupply further by allocating the land to other uses, maybe the London Plan should be addressing how retail parks should be preserved and integrated more into local infrastructure.

Final thoughts

The London Plan is still at the consultation stage and this document is but the latest iteration. But it is nevertheless a good indicator of current thinking and potential direction of travel. From a retail perspective, it appears to have largely flown under the radar to date, with limited public response.

Of course, retail is just one facet of the London Plan. The Plan has significant ramifications for every real estate asset class, be that Commercial or Residential. These are explored and collated in much more detail in Knight Frank’s cross-sector report Towards a New London Plan.