RICS - Retail General - London, Retailers Suffer From Congestion
Date: 13 Feb 2004
As the London congestion charge enters its second year, the winners and losers are beginning to emerge from the city’s biggest and most ambitious urban management initiative.
RICS has today (16 Feb) published a report which shows the mixed fortunes of those affected by the charge through its impacts on property and business. The retail sector is the big loser. The report shows that 90% of retailers and 75% of leisure occupiers view the charge negatively. They believe that fewer people are travelling into the charging zone if their journey is not necessary, and turnover is consequently suffering.
Office space remains largely unaffected, with many businesses positive about increased ease of travel within the zone and a more comfortable environment.
RICS found that 64% of commercial property surveyors say the impact on shops varies depending on where they are located in the zone. They say the charge has the biggest impact on businesses on the zone boundary, as customers or clients living just outside are unwilling to travel in and pay the charge.
At this stage there is little evidence of businesses relocating outside the zone but in some cases the charge has already been used as a factor in rental negotiations and rating appeals.
The report contains case studies of small businesses affected by the charge as well as focusing on five areas in and around the zone; Marylebone, Soho and Covent Garden, Lambeth and Newington, Islington and Clerkenwell.
Small retailers are not the only ones concerned; leading London retailer John Lewis has commissioned its own research due to be published later this year.
According to property agents, the congestion charge is having little impact on the residential property market. They have reported no real movement in residential values which can be attributed to the charge. In general, people still find it advantageous to live in the zone.
But if the zone is extended to include Kensington and Chelsea, as has been suggested, all zone resident discounts could fall dramatically from 90% to around 50%. This could cost car owners inside the zone an extra £700 a year – a real disincentive to own a car, or even to live centrally.
The report makes four recommendations
• There is a need to improve public transport provision in London by a combination of infrastructure projects such as Crossrail and initiatives that encourage people not to use cars
• The impact of the congestion charge on property markets needs to be studied over a number of years
• The trend against retail in particular should be monitored and consideration given to alterations to the scheme if it continues
• Careful consideration must be given before extending the scheme
RICS Chief Executive Louis Armstrong said:
‘RICS has supported the scheme from the start. From New York to Hong Kong, the eyes of many cities around the world have been on this bold initiative which was introduced amid mass scepticism and fears of technical failure. In fact it has worked very well, making the capital cleaner, quieter and much more navigable by road.
‘But the full impact on the complex organism that is a city has yet to become clear. The effect on retailers may not be fully felt for years to come and public transport in London needs sustained attention and investment for the concept of reduced car-use to work. It is one link in a chain of initiatives that will help to connect Londoners to where they want to live and work. It cannot achieve these results in isolation.’
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