The death of the high street has been forewarned for the last 20 years, but a reinvigorated planning framework and renewed investor interest in mixed use schemes could create a platform to reshape the high street and revitalise communities and local economies.

In this latest podcast real estate partner Ed Colreavy chats with Jonathan Murphy, CEO of UK real estate investment trust Assura, about the role of healthcare provision within high street regeneration.

The podcast dives into some of the topics that will be discussed in our joint event with the British Property Federation next week.

Listen to the podcast


Ed Colreavy: Hello I'm Ed Colreavy, a partner here at Gowling WLG and welcome to our latest real estate podcast. The landscape of the high street has been changing for many years with customers embracing online shopping and operators remodelling their businesses. Although the death of the high street has been forewarned for the last 20 years, a reinvigorated planning framework and renewed investor interest in mixed use schemes could create a platform to reshape the high street and revitalise communities and local economies.

Today I am joined by Jonathan Murphy, CEO of Assurer. Assura is a UK real estate investment trust specialising in the development and management of a portfolio of GP surgeries and community healthcare buildings across the UK. We will be discussing how to regenerate the high street ahead of the event we are hosting with the British property federation in a few weeks' time. Thank you for joining me Jonathan and Jonathan if I can start with the death of the high street which has been touted for a few years now. In fact the Portas Review in 2011 sought to try and understand why it was happening and made recommendations on how to bring economic and community life back into the high streets are town centres. How successful have we been at implementing those recommendations and what challenges has the high street seen in the last 11 years?

Jonathan Murphy: First of all thank you for having me on, very glad to have the opportunity to talk to you today. Yeah in terms of challenges of the high street, they have been very well documented as you say and if we look at where we are in a post-Covid world clearly the impact on people's behavioural patterns, shopping patterns, commuting patterns, will have a long lasting impact so almost the Portas Review and the need to rebalance the high street has sort of brought into even sharper focus I think with the changes that the pandemic has brought about and if you look at today's high street, I think most people now recognise that that traditional model of a retail led entirely retail led environment without a mix of residential, without a mix of health which is obviously our area of expertise or without an increased element of leisure. Frankly that model no longer works and there is need to bring a more diverse range of offer and services into a high street to bring the footfall and the customers back into the mix. I guess one of the good things, there are specific challenges obviously that the pandemic has brought so clearly if you were to walk around the centre of London today which I am not because we are based in Warrington, but if you were you would see a very challenged environment because of those community patterns have changed and less people are coming into the office. But it is definitely a recognition that a more diverse offer will bring people back in the high street and bring it back to life, and I think healthcare which is an area that can play a really important role in that, because there is a real benefit to see your doctor or your clinician or your nurse or whatever type close to home and at a convenient time and location for you so actually it is a really positive combination of needs and demands and brings footfall to the high street, so it is a very different landscape and it is one probably very different to what the Portas enquiry envisaged, but I think that kind of mixed economy, that mixed development model that you talked about I think has got great potential and where it has been delivered successfully has really reinvigorated some high streets so it is not all doom and gloom. I think there is still a really important role for the high street.

Ed: That is really interesting thank you Jonathan and you have touched on mixed use spaces there being more than just retail and obviously healthcare is your area of specialty. If we can look at design and innovation and that is the key part of your business, what has the experience of Covid taught us about how healthcare can and should be delivered in our local communities?

Jonathan: Yes it is really interesting so you will have read a lot in the papers I think Matt Hancock back in the day when he was a politician rather than a celebrity, he used to talk about doctor Zoom and he was very keen on the idea that you should have a digital first healthcare delivery so i.e. your first interaction is always digital and not on the human level and there was a definite trend at the height of Covid, the level of face-to-face consultations in our doctors' surgeries which is our core business is GP surgeries probably dropped from around 85%/90% face to face to below 50%, so there was a dramatic shift overnight like many sectors, sector or trends and shifts, made in a matter of weeks that normally would take decades and there was this expectation that perhaps that was the way it would go and that you would have your clinical treatment done primarily though digital tools, through telephone calls, through an online screen. Well the reality is that that has not actually stood up to scrutiny in a post-Covid world and we have seen a really dramatic bounce back in terms of those face-to-face consultations are now back to 75/80% and I think that reflects that healthcare is a very much a human service. It is not a transactional service and that the importance of that face-to-face consultation is really crucial. So what that means is technology has a really important role to play so it is really convenient for example just to get your test results back on the phone or maybe you can book a repeat prescription online, that is really a fantastic use of technology. But the need for that sort of physical interaction with your clinician is still really important, so I think Covid has taught us that we need to make better use of technology, we need to be more efficient but we also mustn't lose sight of that important human interaction and if you think about a high street environment in the broader context if you think about the online shopping experience versus the physical shopping experience, one does have different elements and it is the same in healthcare. You know you cannot replace a physical clinical appointment always with an online one like you cannot always replace a physical shopping experience with an online one, so it is about a hybrid model, it is about making better use of technology but also a really important part of that human element and that community side and that bringing people together and I think the high street has a really important role to play in all of that.

Ed: I think that is right and I am particularly interested Jonathan of actually your thoughts on how we can operate a system where we have diagnostic testing and minor treatments being carried out in local community areas with the ability then to free up hospitals and we are all acutely aware aren't we of the pressure and stress that the NHS is on generally, and I am just interested on your thoughts about that healthcare model and where you think we are on the journey to achieving that and how important that is for the future.

Jonathan: I think that is a really good point Ed. So I mean if you look at the code pressures in the system, you can read the stories about ambulances are backed up at hospitals because they cannot offload patients, you have got bed blocking in hospitals because people have not got care homes to move out to. So our hospital system which is relatively small compared to most European countries so the numbers of beds per population you have is at the lower end of the scale, so that part of the system is under real stress. So there are two obvious ways of dealing with it, one is being really efficient in terms of moving people out, so the so called 'bed blocking' so obviously providing capacity in the social care system helps with that but the other is more important is stopping people getting to hospital in the first place. Now clearly if there is a treatment that can be done in a community setting closer to home that is massively more efficient for you as a patient, but that is also massively more efficient for the system. So if you go and see your GP and you get treated at your GP, the NHS estimates that costs them about £45 for an appointment, but if you go to A&E that is minimum charge to the NHS of £150 plus before any tests or diagnostics are done. So three times more expensive for you to be treated in hospital than in a community setting, so whatever we can do to expand capacity in the community has to be the right answer because it saves the system money, it is more efficient for you as a patient, it is more convenient because you are closer to home and it also has a really important role to play in terms of utilising potentially vacant space and bringing people into communities for other reasons. So it is a real classic case of it benefits all parties if we can build up that out of hospital treatment area. Now it not easy, the Government have announced that they wanted to roll out their so called community diagnostics programme and it has got off to a slow start if I am honest because it is challenging, there are logistical challenges with delivering clinical spaces on the high street. The clinical requirements you need for space sometimes is quite hard to deliver in converting a Next store. It is just not suitable, so it is not always a simple matter of finding an empty shop and you put a clinical use into it but there definitely is a role to play for some of that capacity to be brought into delivering that all important diagnostics and out of hospital capacity which as I say ultimately will massively save the system money.

Ed: And I think we can all see the benefits of that Jonathan. I am interested on your thoughts as a developer of new healthcare space and where we are on the journey there and are you seeing that translating into new opportunities for you or are we some way away from being able to push that as a great benefit for a regeneration opportunity for example.

Jonathan: There is definitely some opportunities, so it is happening so there has been a number of the schemes delivered, the diagnostics schemes just to focus on that area, and a lot of those have been re-purposing existing buildings and bringing them back to use. We actually have not done very many of those because so far, as effectively they have utilised effectively empty retail units or so on which would not form part of our portfolio. The bit that we could do is because we have 603 existing medical practices across the country, is what we would like to do is to expand the diagnostic offering within all of those, and then that sort of expands your GP surgery, if you like, into much more of a clinical hub and less somewhere that you just go to see your GP but somewhere where you can go and get a blood test, where you can go and have a counselling session, where you can go and have some diagnostics undertaken so that is the vision for us that when we see a big opportunity, it is relatively modest so far but there is significant scope here. And just to be clear there are some challenges so for example we have just converted an empty shopping centre into a medical centre, so we have just completed that project in Plymouth so it is a brand new facility, it is going to serve over 15,000 patients and the unit had been empty for years, it was an old M&S store that had been closed down and had been empty for over five years. Fantastic example of bringing empty space back into use, driving footfall, meeting in a community where there is already public transport infrastructure, there is already parking available so there is no additional stresses on the local infrastructure, so it is a classic win-win, but I have to say it was actually very technically challenging and that is the problem we have is high street shopping centres are actually quite a challenge for us to convert just because of simple things like natural light so if you are going to go into a clinical setting, it is really important that you have access to the natural light, there are studies that show that has a discernible impact on health outcome. So sometimes the foot prints of the buildings can be a bit of a challenge so it is not quite as simple as finding an empty unit and go right let's fill it with healthcare, it does not always work that way but there is definitely a role to play and we hope to do a lot more of that going forward.

Ed: That's great thank you and actually we can all see the benefit of having a strong healthcare delivery locally. That is always going to welcomed I think and if we can just move on, I think in terms of looking at town centre regeneration generally and talk about skills, how important is it for future regeneration and development of our town centre spaces to be carried out in a way that invests in skills and the local community and how we can achieve that Jonathan?

Jonathan: Ed I think that is absolutely essential. So, at Assura we have a mantra that we always place social impact and sustainability at the heart of what we do and that might sound like a nice phrase, what does it actually mean so it means that when we are looking at delivering a new project, we are looking at what positive impact can we bring above and beyond the health facility so of course a new health facility is positive, so that is a great start, but what else can we do? So, we look at all elements of that so we look at the supply chain so who is going to build it, what labour are they going to use, what materials are they going to use, will they support local apprenticeship schemes, will they support training that will ensure that those people have skills that will support them for the rest of their working lives, those types of things are absolutely fundamental to the way we do business and they should be fundamental to the way in my opinion everyone does business. so if you are looking at regenerating a high street, there is a massive opportunity not just build environment because often people when they think about property, they just think about the physical bricks and mortar, that is not it at all, it is the skills, the money invested to get to deliver that scheme but also the opportunity that that scheme then delivers in terms of bringing people together, providing employment, providing opportunities for people for many years to come. And I think the broader impact of regeneration often gets overlooked and it should be fundamental and I really passionately believe that. So, if I take an example, we have just build a medical centre up in the north east in Wallsend. That is a district of Newcastle. It is an area of quite challenging economic backgrounds, quite a high level of health inequalities, so what we have done there, we have worked with the local NHS team and we have worked with our contractor to deliver the scheme that is fantastic as a delivered product but in building it, we have ensured that they have used local materials, they have used local labour wherever possible. They have committed to delivering a certain number of skilled apprenticeship programmes and that will provide a great facility, but by getting there we have also made a massive contribution and then going forward our community fund, which is a big part of what we are about, is also active there in that region and we are going to be providing ongoing support from many years to community groups providing health and wellness activities in the locality. So, for example are we going to be supporting the local sports club in terms of providing facilities for disadvantaged communities, we are supporting the local NHS in terms of delivering the so called 'social prescribing', where you commit to people to doing things, social groups or community groups other than just so you are moving people away from always a clinical outcome so that type of thing I think is really important so I think that absolutely needs to be a fundamental part of the way that we do business going forward.

Ed: And I guess going back to Portas, this is just about saying it is not just the economy it is about social cohesion and breathing life into communities so I think that is a really interesting point Jonathan.

Jonathan: Absolutely. And what we would love to do, we have actually got a scheme that we are building at the moment in Cheshire where we are building a community space at the same time and that type of model is one that we are really keen to explore. So, we will deliver a doctor's surgery, we are also delivering a community hall incorporated into the facility that we are funding. And that type of community facility and to build that local community is really important.

Ed: Thank you. Thank you. And if we can turn now to the economy generally. Obviously everything that we do and say is framed by reference to where we are in the economic cycle. We have already seen the impact that the 2008 financial crisis had on our town centres. What do you think the longer term effects of another recession could be, what do you worry about Jonathan?

Jonathan: Well obviously any sort of reference to recession or economic hardship is something that causes every person concerned both on a personal level and as a business manager and leader, so of course pressure on the high street, more vacancy is going to be a big problem. But I think there are obvious things that we can do so a much more nimble response on the rates environment would be helpful in terms of responding quicker to valuations so that the rates that people are paying reflects the actual economic activity and value that is going on at that time not five years, ten years, 15 years ago so I think a more nimble environment would be helpful. I think also a recognition that it is also a great opportunity as we move into recession absolutely the right time to be making some of those long-term decisions. So, we are massively under-invested in as a country in terms of our health infrastructure so the recession for me provides the perfect opportunity as construction costs start to come off, we are seeing a decline in activity. Well that's spend that time to invest the money now to build our health infrastructure so that we are an even better place when we come out of this recession and drive that into communities focusing on mixed-use developments is also a really crucial part to supporting communities during what should be potentially quite a hard time. So I would love to see it as an opportunity to actually really push forward and make further investments in our communities and our high streets at this time to make sure that we are in as strong a position as possible when we come out of the recession so that would be my overarching sort of not an ambition, my overarching shopping list if you like.

Ed: That's interesting and going back to your earlier point Jonathan about saying that there are healthcare savings to be made so yes investment in healthcare infrastructure is critical for all the reasons you have clearly set out but also highlighting the benefits there so this really is an investment for everybody for the future isn't it?

Jonathan: Absolutely so we should be investing in that infrastructure and we should also be investing in those skills. The fact that there are empty places at nursing and doctors' places on training programmes at the moment frankly is a scandal. We should be investing in our infrastructure and our skills now, so that we have those capabilities for when we emerge from this recession.

Ed: That's really helpful. So we have looked at I guess some of the issues and some of the problems. If I could ask you to wrap this up. In terms of key initiatives, what would you like to see implement in moving forward Jonathan to help mitigate some of the points we have discussed today in order to help revitalise our community spaces and high streets?

Jonathan: Yeah I mean obviously always a challenge for anyone trying to delivery any kind of redevelopment is the relatively slow nature of the planning system so anything we can do to streamline and improve the efficiency of that system would be fantastic but probably more importantly with more of a long term approach to both skills, planning and infrastructure investment would be the two things that I would highlight. Forgive me if I am narrowing very narrowly on the health world just because that is the world I operate in, a long-term plan for skills and the NHS, a long-term plan for the infrastructure for the NHS delivered in a community setting, for me that would be the single biggest thing, it would have a transformational effect on our high streets but also it would be massive for the communities and massive for health outcomes so it would save money down the line, I know it would be investment now but in five years' time, we would be benefitting from the savings from that level of investment in both skills and infrastructure so those would be the two things that I would probably say would make the biggest difference.

Ed: Great. That is really helpful Jonathan and thank you very much for your time today. We have touched on economic, the community and the healthcare benefits of regeneration of high street spaces in a way in which that Assura and others are leading the way so I think that is really interesting and talking ab out how we can actually use the opportunities to invest moving forwards and also to, as you say, breathe life into skills in the locality, which I think is really important and design innovation and what you are looking at I think is a really key part of that so that has been a really interesting discussion today so thank you very much for your time for joining me.

Jonathan: Thanks for having me on.

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