Can the food hall save the high street?
Recent news that Market Halls are set to open three permanent food markets (including the biggest in the UK) in the next 12 months has surprised many in the industry.
With the demise of BHS leaving a mass of high street retail space vacant up and down the country, the closure of some Debenhams stores, and the news that House of Fraser has approached some of their Landlords with a view to reducing rents; it has been clear for some time that “traditional” retail concepts are struggling on the high street.
However, these issues are not only specific to retailers – with the hospitality industry seeing a perfect storm of rates rises, wage increases, high rents and rising import costs culminating in reduced restaurant margins. Notable casualties in the casual dining sector (Byron and Polpo to name a few) have signalled the end of the space race the F&B industry has been engaged in over the last 5-10 years. CBG Law expects to see further rationalising of portfolios among established operators with new entrants to the market and those operators still looking to expand being more particular when it comes to location.
With the high street suffering it was only a matter of time until someone tried to come up with a solution.
But aren’t Street Food markets the answer?
With their low barriers to entry and limited up-front capital expenditure street food markets have given a number of would be restaurateurs a platform to showcase their concepts and build a loyal fan base without betting the farm. As a result, they have enjoyed high levels of growth over the last few years with new markets and market operators popping up around London and the home counties.
However, the main attraction of such markets (i.e. the low entry cost caused by their transient nature) is also their undoing. Even the likes of Boxpark and Pop Brixton are effectively placeholders (or often, given their popularity, place-makers) on temporary arrangements to make use of vacant plots while landlords or developers struggle through the murky waters of the planning system. This leads to market operators and traders being unable or unwilling to commit to a long-term investment in a site in the fear that they could be moved on at relatively short notice.
That is not to undervalue the significant contribution the street food market has made to the high street. These markets have spawned a new breed of chain (Pizza Pilgrims, Bleecker St and Bao) who have trialled and honed their concepts and then moved to bricks and mortar locations in order to build a business, achieve certainty, and continuity of trade.
As solicitor’s specialising in the restaurant industry, CBG Law have advised restaurateurs and chains for more than 25 years, with clients in many of the premier developments across the country. This move towards certainty is a trend that we at CBG Law have experienced first-hand. While currently acting for a number of expanding operators at the forefront of the hospitality and leisure market we are seeing our clients taking longer leases (frequently for 15-20 year terms) thereby exceeding the 10-15 year terms which until recently had become the industry norm.
Reports suggest that Market Hall has taken “long leases” on their new sites enabling them to offer traders the continuity of trade often not seen in the street food scene – and all without being a slave to the elements!
So why else is this market hall so revolutionary?
In short, it’s not - the concept has been around for decades and is simply an evolution of food courts in shopping centres up and down the country, albeit cleverly branded and packaged for today’s discerning consumer.
Following the recent spate of closures, the CGA report sees growth in the hospitality and leisure market being driven by independents and those operators who provide communal experiences. Market Hall certainly appear to fit the brief, all while enabling diners to stay dry and repurposing the forgotten department stores.
The UK has however, been slow to catch on to the market hall trend (just look at Stockholm, Time Out Market in Lisbon, Mercado in Antwerp and Eataly – to name a few).
With the Oxford Street site set to house retail on the ground floor together with a demo kitchen and vendors on the first floor with four bars thrown in for good measure the market hall concept may well be the new department store.
Conclusion:
The UK’s love of food and demand for the next trend is incessant (have you ever noticed that cookery books are rarely included in a sale? – they just don’t need to be). However, we don’t see the new market hall as a silver bullet set to revitalise the high street, and certainly can’t imagine that there will be a Market Hall, Eataly or Time Out Market in every university town up and down the country.
However, what Market Hall and its competitors will do is provide a vital test bed enabling entrepreneurs to trial their new concept on a short-term basis de-risking exposure and initial outlay (saving operators from paying a rent deposit and offering an all-inclusive rent).
We also expect the trend of traders taking permanent locations following a successful trial in a market hall environment to continue. This will hopefully lead to some vacant units being filled, providing much needed employment, and some respite to the spate of recent closures.
With a promise that Market Hall intends to let traders “maintain their identity and autonomy” I look forward to visiting the Oxford Street food hall and assisting clients and operators looking to enter similar schemes.
Alex Hutchings is a Partner in the commercial property department at CBG Law and advises start-ups and established brands on the property aspects of their expansion, and ongoing operational issues. If you would like to speak to Alex about your property requirements, please email ah@cbglaw.co.uk or call 020 7462 6961 to arrange a meeting.