The future of our cities and towns depends on providing more new mixed tenure homes ahead of retail and other uses. This was one of the headline findings of the sixth annual ‘state of the nation’ report from property consultants Lambert Smith Hampton (LSH) and Revo.
The report finds that retail is no longer seen as the solution to the critical challenges many of our centres are facing. 62% of stakeholders from across the public and private sectors agree our centres have on average 20%-39% too much retail space.
69% think the most effective local intervention to support our centres over the next five years is to redevelop or repurpose vacant retail space for a blended mix of uses – not just new homes, but schools, healthcare facilities, leisure, civic, and community uses.
Meanwhile the provision of new homes is seen as the most important use type for ensuring town centres’ vitality and vibrancy.
The annual Shaping Tomorrow’s Places report provides the first snapshot of sentiment in the sector since the Labour government came to power in 2024. It is informed by more than 250 responses from experts, advisors and leading decision-takers across the public and private sectors who are involved in the planning, management, funding and development of cities, towns, high streets and shopping centres.
Dr Steven Norris, executive director at LSH and national head of LSH’s Planning, Regeneration + Infrastructure (PR+I) business, commented: “There is no one size fits all solution, but the delivery of new, mixed-tenure homes in, on top of and at the edges of our centres will be fundamental to their very existence. Our centres are not only the most accessible and sustainable locations for new homes – they also have the potential to make a significant contribution to the Government’s target of 1.5 million new homes.
“But in the 12 months since it was elected, the Government’s main focus has been on building new homes on the green/grey belt and developing new towns, with little mention made of or funding allocated to the much-needed recovery and regeneration of our centres. Homes England can play a greater role to play in helping to fund and deliver new homes and critical regeneration projects in some of our failing centres.”
Optimism outweighs pessimism, but is down sharply
While leaders are still generally more optimistic (31%) than pessimistic (22%) about the outlook for the next 12 months, optimism levels are down from 42% last year, 45% in 2023 and a high of 49% in 2022.
Furthermore, 41% of local leaders and decision-takers intend to plan, fund, develop or occupy new town centre regeneration schemes over the next five years, which is down from a high of 72% in 2024 before the election of the new Labour Government.
Dr Norris said: “Although this year’s research shows stakeholders are still more optimistic than pessimistic about the future for our centres, the mood music is undoubtedly down on previous years. Wider economic and geopolitical uncertainty is weighing on ability to get projects out of the ground, and those involved in regenerating our centres are adopting a wait-and-see approach as they digest the full effects of the reforms that are being set in motion by the new Government. In the meantime, the message is clear: we need to diversify beyond retail to build resilience, and the need for strong public-private partnerships has never been greater.”
Funding sources and flexibility needed
Asked how they might fund regeneration efforts, leaders cited joint ventures and public-private partnerships as the top option. Meanwhile government funding initiatives have plummeted from first to 12th most cited potential funding sources.
Business rates reform (61%) remains the best way that government could help support town centre recovery over the next five years, according to survey participants. This is followed by a long-term plan for towns (35%), which is now the 2nd most commonly cited support funding model, up from 10th in 2024.
But proposed reforms of business rates are seen as both an opportunity and a challenge. 63% of respondents believe these reforms could encourage new investment and openings of smaller units on UK high streets. However 59% are concerned that the changes could lead to the closure of larger shops and business, with consequent adverse impacts on smaller shops and business due to loss of footfall and spend.
Faster and more flexible planning policies are seen as important enablers of delivery. Just under half (46%) of respondents think the government should speed up the determination of planning applications, and one in three think that more flexible planning policies are required (35%).
However, 45% of respondents believe the revised NPPF policies will have no material impact on the planning and regeneration of UK centres over the next three years.
Devolution changing the agenda
Devolution is seen as an important enabler of the regeneration agenda. 60% of respondents agree that the move towards greater devolution could have a positive impact on the planning, funding and regeneration of centres. When asked who should lead regeneration efforts, mayoral and combined authorities are the 3rd most cited stakeholder group, up from 7th in 2024.
Meanwhile, when asked which of the proposals in the December 2024 White Paper on English Devolution could most benefit our centres over the next five years, the top responses were the introduction of Local Growth Plans (50%) and the consolidation and simplification of local leadership.
Dr Norris concluded: “Of course, there are challenges – especially around funding. But devolution is also creating an opportunity. What we really need now are patient long-term funding models. This, together with engaged and empowered local government, is ultimately what will unlock regeneration – and support the creation of the vibrant, mixed-use centres that will raise living standards and support a thriving economy.”
