The great British bake-in?Dan Innes
How much of our lockdown behaviour is now baked in to our retail property world?
The country may seem like it’s in something of a state of retail shock. The buzz on the high street is more of a whimper, but the rates of decline are slowing – as shown in the LDC reports. But, contrary to popular belief and many reports in the media, the high street is slowly coming out of the deep freeze. Recent BRC figures did show that high streets outperformed shopping centres in their footfall recovery, but was this associated with a preference for open air venues – and fortunately figures seem to be on the rise again.
Abroad, the mayor of Rome spoke at MIPIM and attributed most of the city’s recovery to the easing of pavement café restrictions; you’ve got to love a face to face meeting over a decent espresso! And again outside of the UK, the signs of recovery can be found in cities like Oslo and Lisbon, where operators are reporting footfall that exceeds pre-pandemic levels. But how much have we learnt in the UK, and is our lockdown behaviour baked in?
Are we doomed to social distancing and joining meetings forever online, or will we slowly be returning to some sort of normality? And is there indeed a new normal, or any normal at all? David Kenningham of Kenningham Retail tells me that “there is simply no normal now” – and that landlords and retailers are much more open minded than ever before – with one global retailer telling me that finally the two were seeing much more eye to eye. So long as the lawyers can document it, it can fly.
At least on the retail side, there are signs of the confidence returning. One of those is leisure activities picking up, reflecting a desire for people to come together and enjoy real life experiences after months of restrictions and lockdowns. Most recently, leisure concept Gravity opened a three-floor, 100,000 sq. ft. location at Invesco/Landsec’s Southside in Wandsworth. And over the summer Ellandi announced that it would develop Merry Hill shopping centre into a family entertainment ‘leisure district’, having received a £50m investment from its lenders for this specific purpose, showing that investors, too, believe that the importance of leisure will be a lasting trend. The transformation of the Oxford Street Topshop into a city IKEA is also a positive sign that bricks and mortar retail is still very much on the agenda – just different names above the door.
Major changes in the retail market include the shift that is happening towards shorter leases, fixed rents, fixed uplifts and side letters, while turn-over rents are on the rise. This of course means landlords will have to work harder and communicate better than ever in a much more collaborative fashion to keep tenants onboard and ensure a great tenant mix.
Whilst the more dormant landlords nap, technology is filling the void, with brands like Deliveroo providing natty new ways to deliver food and other necessities – in its latest move, it teamed up with Boots to deliver more than 400 health and beauty products on demand. Amazon continues its inexorable rise with its Go concept with 30 new stores planned, and the Gym Group actively looking for empty shop spaces to expand – 40 new clubs planned before the end of 2022.
The earliest signs of investment transactions are also appearing – such as Ardent’s acquisition of Touchwood shopping centre in Solihull from Lend Lease – and be sure that this will be the first of many before the year is through. As networking events can now take place, expect more and more transactions too – we’ve already had a September edition of MIPIM, and soon its Completely Marketplace and MAPIC will drive the industry’s cogs forward again.
Occupiers themselves are achieving cut through in innovative new ways – from diverting product launches and catwalk shows into seasonal films and even the use of NFT technology prevailing strongly. Leasing trips and viewings continue relatively unabated – with international travel easing we’re seeing visits from you know who from Spain, and others travelling in from Italy, France, Germany – things are opening up, thanks to our vaccine programme and easing of mask restrictions. The less intrepid are working around this by undertaking viewings via FaceTime, with agents linking to Board meetings from vacant units – with some deals even happening sight “unseen”.
So, as people return to the office, our streets, squares and plazas are beginning to hum once more, just in a slightly different way. Many of our tech, wellbeing and entrepreneurial behaviours are now baked in to our day to day – which we think is a good thing. That’s certainly the case here at Television Centre. The tune is a little muted for now though – but with that there is glimmer of a roaring twenties feel to ideas and projects that once would have been dismissed out of hand. No ideas are bad ideas just now.
As published in Local Data Company’s Looking Beyond Lockdown 2021 report.