Pressure on retail
St James boss wants online tax and longer rates freeze
St James: opens in the summer
Martin Perry, who is spearheading the new St James Quarter shopping development in Edinburgh, has joined calls for an online retail tax.
He has also demanded a suspension of business rates for as long as it takes for a full recovery of bricks and mortar retail.
Mr Perry, real estate director of development at Nuveen Real Estate, said government needed to act “urgently” to the crisis facing the sector.
Chancellor Rishi Sunak was expected to announce an online tax in his Budget last month but is thought to have delayed his plans until the autumn to discuss what is a global issue with other governments.
Mr Perry’s comments came in an update on the property market by Lismore Real Estate Advisors which spells out the impact of online retailing on physical shops.
It reveals that shopping centre owners in Scotland looking to sell schemes with limited alternative uses are having to accept reductions in value of up to 75%.
James Craig Walk at St James
The update is published three months before the scheduled opening of the delayed £1 billion St James Quarter, with 85 retail units accounting for more than 20% of the city’s retail offering.
Mr Perry said: “The challenge over the next five years is that the cost/value relationship has been substantially altered by digital progress [online shopping] and the property industry needs to respond faster to this and modernise practices in all areas including governance, investment, leasing and operation.
“There are significant challenges ahead but with the right changes, approach and investment, good returns for all participants can still be achieved.”
He added: “There are two key measures that the Government should be urgently enacting. The first is the suspension of business rates for the entire period to allow for full recovery of physical retail.
“Secondly, the need to level the playing field between physical retailers and online retailers by introducing online sales taxes and allowing the revenue generated to be put back into the upgrading of physical retail environments, such as town centres, before these options cease to become viable.”
The Lismore research found that 75% of respondents expect to either decrease or maintain their exposure to the retail sector, with a quarter seeking to increase their exposure, albeit this is predominantly through an increase in exposure to retail warehousing and food stores.
When asked to rank the best performing retail sub-sectors during 2021, not surprisingly high street and shopping centres are viewed as the weakest sub-sectors, accounting for over 95% of responses in the weakest two categories.
As the market settles, the strong sentiment is that turnover rents are here to stay, with no respondents expecting turnover rents to decrease in the short to medium term.
Sturgeon pledges town centre help
UPDATE 2 April: Nicola Sturgeon will today say that if re-elected to form a government the SNP will pledge support for business that will include:
– 100% non-domestic rates relief for retail, hospitality, leisure and aviation sectors this year, with an investment of £719m.
– £275m over the life of the parliament to support community-led regeneration and town centre revitalisation.
– Steps to support the development of 20-minute neighbourhoods.
– A £10m “Scotland Loves Local” fund – to encourage people to shop locally when they can, helping keep wealth within their community.
Ms Sturgeon is expected to say: “Revitalising our town centres and communities was already a priority of the SNP Government before the pandemic struck, but that agenda is now essential.
“In government, the SNP has already gone further than the UK Government by extending 100% rates relief for the hardest-hit sectors for a full twelve months.
“And if re-elected, we will take forward plans to spend £275m over the life of the parliament to support community-led regeneration and town centre revitalisation – as well as supporting the development of 20-minute neighbourhoods.
“On top of this significant government investment, all of us can help our communities, and protect and create local jobs, by spending locally when we can, and we’ll build on our Scotland Loves Local campaign to highlight the many benefits of doing so.”
David Lonsdale, director of the Scottish Retail Consortium, said: “With one in every seven shops lying empty there also needs to be a concerted effort to reduce the cost of operating in our town centres, for retailers and other businesses, which is why SRC has called for action to substantially lower business rates and put it on a more sustainable footing and for an end to the current surcharge on larger premises.
One in seven shops lies empty
“We’ll consider the detail of this new report, however we do have concerns about the plethora of frankly reheated ideas for extra taxes and levies it suggests. Much of it reads like a charter for extra cost and complexity, pushing up costs on consumers, on firms, and on an already overtaxed retail industry.
“For example, business rates are already levied on car parking spaces, so introducing a new tax on out-of-town parking spaces – whether they be at retail or business or industrial parks, or even at park and ride facilities – could see these taxed twice, or potentially even three times if councils use their existing powers to introduce workplace parking levies.”