Posted by Vicky Hernandez, Partner
Major shift in retailer landlord relations on way
The government has set out its eagerly awaited roadmap to re-opening a locked-down country. Shops and hairdressers together with outdoor hospitality will reopen from 12 April, with all restrictions hopefully removed by 21 June.
Vicky Hernandez, a Partner in the Real Estate team at Royds Withy King and whose clients have included AllSaints, Ladbrokes, Moss Bros, The Body Shop and Arcadia Group, comments.
“Retailers have been one of the hardest hit business sectors and have eagerly been awaiting this moment. It is, however, just the starting point for a major shift in the relationship retail tenants have with their landlords.
“The government’s roadmap is likely to result in the lifting of the moratorium on winding-up petitions and there will undoubtedly follow a flurry of activity with landlords seeking to recoup lost rent.
A changing landscape for Landlords
“There are, however, an equally large number of retail tenants that have cash to pay rents yet have heard nothing from their landlords. They are unlikely to simply want to hand it over. Retail tenants have the upper hand and will use that to renegotiate rents.
“Take, for example, shopping centres that have lost anchor tenants following the collapse of Debenhams, Top Shop, Top Man, Evans, Burton, Dorothy Perkins, Miss Selfridge. Footfall in those centres is likely to fall and other retailers will be questioning pre-COVID rent agreements.
“Destination high streets may also look very different, as wealthy overseas visitors continue to face travel restrictions. The rents on flagship stores can be extremely high and are unlikely to be sustainable.”
But there are glimmers of hope on the retail horizon, says Hernandez.
“Parts of the retail landscape have held up well and will continue to do so. Discount and outlet stores and malls remain popular and will present opportunities for landlords. Retailers are innovative, exploring new ways to reimagine stores through new products and technology.
“The retail landscape has changed and will continue to do so. We can expect an exciting if very different future.”
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