New realism on the high street

Trading conditions in Britain's town and city high streets may be tough, but a move away from unsustainably-high rents suggests there could be a brighter future ahead. TONY HALSTEAD reports

These are still difficult days for many UK high-street pub operators. Problems on town and city-centre drinking circuits still abound and the general trading climate has yet to see tangible signs of a recovery.

Cut-throat competition, over supply of pubs and increased regulation have combined to provide a pall of gloom over the sector.

The threat of new anti binge-drinking measures, the promise of alcohol disorder zones and the prospect of huge bills levied on pubs for extra policing, all represent new problems for city- centre licensees to grapple with.

At the same time, high-profile casualties and business failures continue to provide the accountants and liquidators with a full workload.

Only this month administrators pulled the plug on more than 20 SFI venues that are now closed and seeking new operators or new uses.

In short you could be forgiven for thinking there is not much fun to be had in running a high-street pub in 2005.

Licensed-trade property agents, however, continue to put a brave face on events and point to encouraging signs that the worst might be over, with the green shoots of revival not that far away.

Significantly a new realism appears to be creeping into the mindset of high-street property landlords, which could mean that the days of sky-high and unsustainable rents are on the way out.

Property demand is still healthy

Colin Wellstead, director of licensed property agent Christie & Co, believes demand for properties is still healthy, provided the proposed rent can support the business.

'All is not lost in the high street, insists Well-stead. 'There are a number of operators still trading successfully and profitably.

'There is still a demand for most town and city-centre premises, provided the rent is sustainable for the business, he adds.

Wellstead believes unrealistic rent levels have been one of the major forces behind the high-street demise and points to a perceived 'barrier when rental demands exceed £100,000 per year.

The demise of SFI and the recent decision to close down sites and return them to their landlords for re-letting for possible alternative use or at a lower rent figure represents 'a function of the market at its poorest, claims Wellstead.

But despite the general uncertainly in the market, specific cities and towns appear to be bucking the trend.

London, Brighton and Manchester are three areas where the high-street licensed trade economy is performing well.

'Brighton and Hove is the most enchanting, exciting and vibrant seaside town in Britain and, however brazen that may sound, it is no exaggeration, claims Fleurets sales associate Nick Earee.

'The town supposedly has a different pub and bar for every day of the year and we have seen a steady increase in the number of instructions we have been receiving from operators.

'In line with this thriving local market, high figures are being achieved for leasehold and freehold properties, he reveals.

In Manchester where the number of licensed premises has doubled over the past 10 years expansion has now slowed, but continued innovation by operators supports local claims that the city is the UK's number-one club and party venue.

'There are a number of ongoing high-profile developments in the city that lend themselves to entrepreneurial operators, such as the Spinning-fields scheme and continued expansion of the Northern Quarter, where there is obvious room for more licensed premises, says Fleurets Manchester sales negotiator Tim Martin.

Although much of the high-street trading sector concentrates on the UK's major towns and cities, there is still much activity centred on the towns away from the major conurbations.

And the high-street surge, evident through the late 1990s, has actually done much to enhance town centres in areas such as the west country.

There have been imaginative restoration and development of old buildings, which have been converted into tastefully-designed pubs, bars and restaurants.

West country agent Bettesworths believes these trading circuits are not solely the domain of the big corporate companies. Senior partner Barney Bettesworth says there is still plenty of room for private operators to flex their retail skills.

The famous Royal Seven Stars in Totnes, Devon, was recently sold off an asking price of £1.5m to experienced licensees Nigel and Ann Way who for many years have run the successful Royal Castle in Dartmouth.

The Royal Seven Stars has become a beacon of the market town, thanks to the personal management style of the Ways, who have proved it is possible for the minnows to compete with the corporate giants.

Over-supply of licensed premises

In contrast Bettesworths is also offering a wet-led Torquay harbourside bar, Number One, a £400,000-per-annum-turnover business, which is up for grabs for £195,000 on the residue of a 21-year free-of-tie lease.

'There is no doubt that the rush by many larger pubcos and chains to establish themselves in the high street has resulted in an over-supply of licensed premises, which has encouraged discount drinking and happy hours.

'The Government is now trying to address these problems through new licensing laws and initiatives such as anti-social behaviour orders.

'It is hoped that many of the behavioural problems in our town and city centres will be tackled and result in down-town locations no longer becoming no-go areas for all but the young in the evenings and at weekends, says Bettesworth.