Who'd be a landlord? The impending fall of retail rents

Freitag, 20. April 2018

Artikel

Most commentators seem to be missing the bigger picture when commenting on House of Fraser's public admission that it is considering a CVA to stave off administration and reset its rent bill.

The focus has largely been on the specific trading challenges of a succession of UK retailers who have adopted this tactic in recent months. However, the bigger issue is that there is a fundamental structural issue with the way that retail property is being valued and we are likely close to a tipping point that may well entirely rebase retail rents and have profound implications on landlords that are not on the front foot.

Same store sales are declining by 2-3% per annum, staff costs are rising by 3% and rent levels have remained largely flat. With this maths, it won't be long before other retailers find the costs of operating stores economically unviable. For those first to feel the pinch, CVA acts as a fast mechanism for pressing reset, cutting out the gangrene and forcing the market to knock down rents on its remaining property. Each time this trick is played, landlords have a gun against their head to either agree crash rent reductions or suffer unit vacancy. 

For both retailers and landlords the conditions are ripe for a mutually beneficial conversation on sustainable rent levels that will both stave off the CVA, keep more stores open and keep property occupied at reasonable yields. 

Only time will tell if they are brave enough to take the plunge...

Experten in dieser Einsicht:

Vorgeschlagene Literatur

Dienstag, 17. April 2018

The perils of losing the human touch

Latest estimates place over 40% of jobs in the retail sector are at risk from automation. That would result in over 2 million lost roles in the UK, and impact 6.5% of the total working population

Wir verwenden Cookies, um Ihnen das bestmögliche Erlebnis auf unserer Website zu bieten. Mit dem weiteren Besuch dieser Website erklären Sie sich damit einverstanden, dass Cookies verwendet werden. Für weitere Informationen lesen Sie bitte unsere Cookie-Richtlinie