The research forms part of BCSC's Future of Retail Property research programme and has been prepared for the BCSC by Michael Bach, formerly principal planner at the then ODPM (now DCLG) until 2005, and one of the chief architects of current planning policy, working with Mark Thurstain-Goodwin of Geofutures.

It shows that there has been a significant increase in the amount of space being built in town centres - up from just 14 per cent of all new retail space in 1994 - but the BCSC says there is still a long way to go.

The report shows that the industry's performance varies considerably with the type of retail development. While 78 per cent of new shopping centre developments completed between 1999 and 2005 were in town centres, only 23 per cent of supermarkets and seven per cent of retail warehouse developments were. And the official figures do not include supermarket extensions or the addition of mezzanine floors.

Looking ahead, development pipeline data suggests that the proportion of development in English town centres will be at 42 per cent within five years, and that 50 per cent of all completions will be found within 110 metres of a town centre - a result of PPS6 which calls for retail developers to seek more central locations within or on the edge of exisiting centres.

In contrast, only 29 per cent of retail pipeline schemes in Wales will be found in town centre locations, and this drops to just 10 per cent in Scotland. But while the next five years will be dominated by the existing development pipeline of committed projects, including those in the early planning stages, the position in 10 years' time will, according to the report, be influenced by the degree to which the current government policy is maintained.

The BCSC now fears that any relaxation of current retail planning policy - such as some of the measures proposed in the recent Barker Review - could be a threat to future development in the next tier of towns.

BCSC chief executive Michael Green says: "The report demonstrates that a consistent approach to planning policy - one that investors can rely on over an extended period of time - is essential if the kind of retail-led regeneration that has transformed big cities like Manchester and Birmingham is to be rolled out to the UK's small and medium-sized town.

"To date, however, town centre development has mainly taken place in the 'top 50' towns and cities. The shopping centre industry is now ready to move in to the revitalisation of the next level of large and medium-sized towns through both new developments and refurbishment. However, the threat of policy change could undermine developer and investor confidence in the system and, as a consequence, put plans for the next generation of centres at risk."

The report suggests that over the next 10 years medium-sized town centres face an uncertain future with many looking for a new economic role, playing to their strengths. Their viability will depend on policy continuity and the willingness of investors and developers to take on the restructuring of these centres. The developers of these schemes are likely to be those that focus on smaller centres rather than those that have been involved in the regeneration of the major city centre schemes.

Additionally, some smaller towns will have to accept that they have little retail future. Those that succeed will have to develop a local vision and reposition themselves through strong a local partnerships.

Meanwhile the balance between in-centre and out-of-centre development over the longer term will depend on whether or not retail developments in the pipeline get permission and are implemented, although most will be completed in the next five years; on whether developers have the continued confidence to invest in town centre schemes; and whether the current 'town centres first' planning policy remains the driver for a more proactive approach to guiding investment to town centres.

In order to increase the amount of new retail floorspace in town centres, it is suggested that a positive, proactive approach in development plans, partnership working and a co-ordinated approach to planning, transport and town centre management will be called for to help inspire developer confidence.

Planning for growth

According to the experts the main candidates for rental growth over the next five years will be in out-of-town retail warehouse parks, regional cities, town centres between 30 and 100 in the retail rankings, and lower-order centres.

While out-of-town retail parks with open A1 consents have performed best, and perhaps peaked, looking ahead there is still potential for a growth in peformance through change in tenants producing higher sales densities.

Regional cities are also seen as 'power centres' with high attraction rates, footfall and sales densities generating high rents. However, the risk is that large shopping centre schemes could have a major affect on the prospects of smaller centres.

Town centres ranked 30 to 100 will also manage to increase rents if they secure redevelopment schemes that increase footfall and expenditure. Meanwhile, the underpriveleged, underserved centres with an opportunity for policy and market forces to deliver regeneration also show potential for rental growth.

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