Night of the Living Dead fails to make any mention of the impact of a Zombie Apocalypse on the retail trade. Day of the Triffids inexplicably omits any consideration of the effect of rampaging horticulture on tertiary education. War of the Worlds never gets to grips with how pubs might reopen after an interplanetary invasion.
In short: the less dramatic, but more realistic, impacts of catastrophe are overlooked. Yet they have a significant impact on what life in Canterbury might be like when this crisis is over.
Now of course I have no more idea than any other pundit who is trying to predict an unknowable future. But there are clues which suggest we ought to worry about the economic life of our city “afterwards”.
The first thing in any crisis is, of course, to survive it. That’s been a challenge for some time for shops and restaurants, even in our tourist and student hotspot, and the number of national chains which have recently collapsed into administration suggests that the high street may be changing forever.
Survival is also key for our two main universities and perhaps for some of the many private schools in the city. Collapsing student numbers, especially from overseas, allied with significant accumulated debts were already a problem for both Kent and Christ Church, which now have to cope with an unknown schedule for re-starting the academic year.
Also facing a mounting problem are pubs, who seem to have been told this week that they will be among the last businesses allowed to reopen. Since the breweries which supply them will need at least a couple of weeks’ notice to restart production, the lead time for any restart is highly unpredictable. And in any case, I suspect it’s going to be difficult to down a pint while wearing a face mask.
But what if we just stop going to shops? Or rather, what if there are no shops (and café’s, and pubs, and restaurants) left to go to?
It isn’t just that we might be so seduced by the ease of the online ordering and delivery capacity and click’n’collect options that we simply stop going shopping. More fundamental than that, and a real threat unless something changes quickly, is the behaviour of landlords and banks.
Imagine – it is hard to do – that you’re a major property owner. The only source of income you have is from rents. Now normally, if a tenant can’t pay the rent, you just evict them. Which is fine if there are only a small number. Then you just keep the shop unit empty until someone comes along who is willing to pay. That way, you keep the notional rental value high, so your property asset value is high, so your balance sheet looks good, so the banks that lent you the money are happy.
But what happens now, when almost all your tenants, simultaneously, find themselves unable to pay? Do you evict them all? Because if you do, suddenly your portfolio and prospects look a lot weaker. You’ve lost all your income; every high street unit is empty, so your negotiating position with new tenants is non-existent, and if you do accept a low rent then your asset value plummets and your balance sheet goes to hell, along with your collateral with the banks.
That is a catastrophic outcome: for tenants, of course, but also for landlords, for the banks – who won’t be able to cash in by selling the assets – and for our city, facing an empty High Street, not to mention for the Council which holds the what I’ve long argued is the white elephant investment in Whitefriars.
And yet unless something radically changes, that seems to be where we’re heading. Although business rates have been suspended and staff can be furloughed, the one major fixed business cost that hasn’t been removed is rent. Unless that changes, businesses simply will have to close, leaving a high street that won’t just be temporarily empty, but at permanent risk of never recovering.
There is only one solution: banks need to support landowners by suspending interest payments on loans; shareholders need to stop demanding dividends; and landlords need to stop demanding unpayable rents. Otherwise, they along with everyone else will be looking at a retail wasteland. Which is in no-one’s interest.