"There is no one size fits all solution, but the delivery of new, mixed-tenure homes in, on top of and at the edges of our centres will be fundamental to their very existence"
- Dr Steven Norris - Lambert Smith Hampton
New research suggests a fundamental shift in how urban centres are being revitalised, with mixed-tenure housing now viewed as a more effective driver of recovery than retail-led strategies.
The sixth annual Shaping Tomorrow’s Places report, produced by Lambert Smith Hampton (LSH) and Revo, indicates growing support for redeveloping town centres by replacing excess retail space with residential and community infrastructure. The study, based on over 250 responses from public and private sector leaders, captures sector sentiment following the 2024 general election.
Retail is no longer viewed as the central solution. Instead, 62% of respondents agree that town centres contain between 20% and 39% more retail space than needed. The provision of new housing, particularly mixed-tenure, has emerged as the most effective use of space to ensure vibrant and viable centres in the years ahead.
“There is no one size fits all solution, but the delivery of new, mixed-tenure homes in, on top of and at the edges of our centres will be fundamental to their very existence,” said Dr Steven Norris, executive director at LSH and national head of planning, regeneration and infrastructure. “Our centres are not only the most accessible and sustainable locations for new homes – they also have the potential to make a significant contribution to the Government’s target of 1.5 million new homes.
“But in the 12 months since it was elected, the Government’s main focus has been on building new homes on the green/grey belt and developing new towns, with little mention made of or funding allocated to the much-needed recovery and regeneration of our centres. Homes England can play a greater role to play in helping to fund and deliver new homes and critical regeneration projects in some of our failing centres.”
The report highlights optimism about the future of town centres, though confidence has declined. While 31% of respondents are optimistic about the next 12 months, down from 42% last year, only 22% are pessimistic. Intentions to initiate new regeneration projects have also declined: 41% of leaders plan to undertake regeneration activity in the next five years, down from 72% in 2024.
“Although this year’s research shows stakeholders are still more optimistic than pessimistic about the future for our centres, the mood music is undoubtedly down on previous years,” said Dr Norris. “Wider economic and geopolitical uncertainty is weighing on ability to get projects out of the ground, and those involved in regenerating our centres are adopting a wait-and-see approach as they digest the full effects of the reforms that are being set in motion by the new Government. In the meantime, the message is clear: we need to diversify beyond retail to build resilience, and the need for strong public-private partnerships has never been greater.”
Redevelopment of underused retail space is a clear priority. 69% of respondents support converting vacant retail units into mixed-use developments including homes, schools, healthcare and leisure facilities.
Funding remains a key challenge. While joint ventures and public-private partnerships are now the most cited funding sources, government initiatives have dropped from first to 12th. Business rates reform is widely seen as the most impactful support mechanism, cited by 61% of participants. A long-term plan for towns ranks second at 35%, up from 10th place in 2024.
However, business rates reform also raises concerns. While 63% believe it could encourage investment in smaller retail units, 59% fear it could result in the closure of larger businesses, reducing footfall and negatively affecting smaller enterprises.
Calls for greater planning flexibility are growing. Nearly half of respondents (46%) support speeding up the planning process, and 35% favour more flexible policies. Despite these views, 45% believe that changes to the National Planning Policy Framework (NPPF) will have no material impact on regeneration in the next three years.
Devolution is seen as another critical enabler of regeneration. 60% of respondents believe increased devolution could positively impact how centres are planned, funded and delivered. Mayoral and combined authorities are now the third most cited group expected to lead regeneration efforts, up from seventh place in 2024.
When asked which proposals from the December 2024 White Paper on English Devolution would most benefit town centres, respondents prioritised Local Growth Plans (50%) and the simplification of local leadership structures.
“Of course, there are challenges – especially around funding,” concluded Dr Norris. “But devolution is also creating an opportunity. What we really need now are patient long-term funding models. This, together with engaged and empowered local government, is ultimately what will unlock regeneration – and support the creation of the vibrant, mixed-use centres that will raise living standards and support a thriving economy.”
