Commercial Property Blog
All posts tagged: retail
One of the few rock’n’roll heritage sites not ripped from the cultural spleen of the West End by the rupturing menace of Crossrail, the nuisance of relentless rickshaws or Westminster Council’s brutal licensing regime is the 100 Club. Nestled beneath an unsuspecting 1960s office block and wedged between two anonymous shops (ones with constant 70% discounts), it witnessed an unlikely gathering of some of the City’s most senior lawyers a couple of weeks ago.
Luckily, they weren’t there to take occupancy, but were committing another crime: murder. Of the musical kind: many great songs died that night as part of the Law Rocks charity event. Like Party Near the Park without the drag.
Property folk will be pleased to learn that Hogan Lovells were one of the better acts there. Fronted by the Fender-baiting frontman, Matthew Ditchburn, who’s slightly reminiscent of Tim Wheeler (from Irish band Ash, rather than the now-defunct Brixton group), who led them through a set of nineties/noughties hits.
Needless to say, the world of Green Day is a universe away from Quarter Day and Ditchburn’s normal role helping the major Reits and pension funds patch up their retail portfolios with CVAs and pre-packs. And while the insolvency and restructuing partner no doubt secretly possesses a carefully curtained hope of being the opening act when they eventually re-commission Top of the Pops, he’s become one of the leading spokesmen in the industry’s fight with failing retailers.
Which takes us nicely to the front page of the current issue of Property Week, reporting that the major landlords have finally agreed a much-talked up standardised lease. Coming three years after Land Securities launched its own Clearlet, it has always made sense to simplify the process. And while many still see the property industry as exceling in being stuffy, conservative and unwilling to shift, I’ve been privileged to see first hand how firms have evolved through innovation at the top.
The Reits and pension funds will of course fear more than a few extra hours of legal fees will be the recurring threat of an upward-only rent review ban. Mary Portas, following her “review” for the government (which seems to have doubled up a rather lucrative commercial deal for TV shows and publicity), seems to be blundering towards the very point if reports are to be believed.
Clearly, no amount of deckchair shuffling with shorter leases is going to stop deserting the likes of Clintons, Game or Peacocks. And with the continuing dominance of Land Securities, Westfield and British Land in prime retail, the divide between primary and everything else will only widen over the coming months, becoming a self-perpetuating spiral for unloved retail space.
The threat of a ban on upward-only rents would exacerbate the situation, meaning more landlords across the industry need to pull their socks up and try and future proof their tenants, and themselves. Whether that’s through clearer leases, monthly rents or donuts on a Friday morning remains to be seen.
Maybe what we need is a 100 Club on every British high street?
Fourteen shop units close each week! This sounds scandalous and horrific but it is a tale that will run and run and nothing will really change. Since the development of the first Arndale Centre we have lived through the slow, gradual, eroding power of the High Street.
The boom of easy access, car ownership, seven-day trading, relaxation of out-of-town planning, and the major chains and supermarkets’ growing power have all been nails in the High Street’s coffin.
My question is, why are we now paranoid about the terminally ill patient? Have we only just woken up to what has been inevitable for decades?
The biggest challenge for the High Street and our Town Centres is the disparate ownership of the buildings, which means there is a selfish approach to solving an individual investment problem, such as a vacancy, rather than a coordinated, strategic resolution.
The solution to harnessing different mind sets and investment strategies lies in knowing how property investment works and how the ownership of our towns and cities is made up.
Investors fall broadly into four categories: pension funds and investment companies which are long-term owners of units and blocks; developers which want to acquire, build, redevelop, sell to investors and move on; traders who will buy and sell units within a relatively short timescale, usually three years, and hope to add value to make a profit; and the owner-occupiers who own the building and run the retail operation.
Within a town or city our High Streets will typically have a variety of owners with one party owning one building, or a chunk of buildings, and others doing the same. To coordinate High Street owners’ interests is asking a lot of the investors, traders and developers – it is virtually impossible!
In comparison, town Centre managers have been with us since the 1980’s and were introduced to start turning the tide and aligning varied interests. The past three decades have shown a change in townscapes’ usage as technology evolves and we inevitably slide from bricks to clicks.
We need to open our minds and let the High Street continue its regression, embrace the changes that come and allow flexibility for the property experts to make money by keeping their assets alive… although there will still be pain along the way.
Yesterday’s prediction of further decline in retail occupancy is a miserable inevitability. If you weren’t too busy enjoying motorway pile-ups or snow polar bears that popped up in east London (there was one in Victoria Park), you may have caught housing and shops minister Grant Shapps rounding the media circuit on Saturday. Never shy of a TV spot, the Rt Hon Welwyn Hatfield MP hit the news channels to tell us all about the latest piece of decisive action to combat retail gloom in that report the Department for Business wrote that had TV presenter Mary Portas’s name on the cover like a ghost-written Jordan autobiography
As many will have noticed by now, there are several boxes than all thinly veiled attempts to garner political leverage have to tick. Some of the most clichéd tactics include:
- Recommending a ‘review’ or a ‘pilot’ to try out something everyone knows needs to be done now, not in three years, or, if you have absolutely no intention of doing it, then suggest ‘consideration’;
- Empowering people who shouldn’t be put in charge of a duster to do something utterly pointless;
- The use of needless hyperbole (‘super’ or ‘hyper’) or worse still, the creation of pointless jobs (usually involving the word ‘tsar’);
- The creation of a meaningless initiative that must have an alliterative name.
Now I’m sure you’ll all remember Portas’s pearls of wisdom included recommendations to ‘consider’ localising business rates and a call to ‘empower’ councils to ‘step in’ when landlords don’t sell-off empty shops. Other nuggets included the creation of or ‘Town Teams’ and, best of all, ‘super-BIDs’ (business improvement districts presumably boozed up like Boris Johnson and Dave on an Oxford night out).
The weekend’s media blitz centred around Town Teams and Portas Pilots. You can see how they roll off the tongue. The idea is that 12 towns will share in a £1m pot to be spent on whatever creative initiatives are judged most worthy. Sadly, I still have absolutely no idea what the Town Teams do. Let’s assume they throw bricks through the windows of betting shops, as the government doesn’t much care for them. It wants to give them a new use class, after all.
The other section of the high street they don’t much care for is the hospitality brigade. In spite of an acceptance that high streets will have to evolve and re-invent themselves (presumably with homes, charities or other things that aren’t shops), there was no mention of the nighttime economy in the Portas review. The Association of Town Centre Managers puts its economic value at a whopping £66bn. That’s a lot of kebabs.
For many towns, BIDs have signified just how much firms can do on their own. Whether you look at the New West End Company, which includes all the superstar retailers along Oxford Street or BID Leamington, which raised £325,000 in its first year, you can find great examples of one part of the solution. Rather than waste time and money on new schemes and reviews, ministers should support what we have.
Unlike many in government, Shapps knows his beat and seems to actually care. But the Tory policy folk need to look at reality because people are starting to see through paper-thin ideas created to score press coverage.
As for the pilot competition, for what it’s worth, I reckon Mary Portas should invent some kind of round thing that retail folk can use to pull their goods to market with. Not sure what you’d call it, but I think it would catch on.
Recent months have seen a slew of UK retailers including Thorntons, Mothercare, Comet, Dixons and announcing plans to abandon high street stores, often in favour of out-of-town retail parks.
It is all too easy to say that our high streets are doomed – but not every retailer is in exodus mode, and displaying commitment to the high street is gaining political significance.
Retailers who are expanded on the high streets tend to occupy one of two spending extremes – discount or luxury.
In more affluent areas, independent retailers are making headway, but the real volumes are at the discount end. Poundland, Poundstretcher and B&M Bargains are seeking hundreds of new stores.
There is also active demand from pawnbrokers, and BrightHouse – a modern day version of Radio Rentals which offers “rent to buy” deals on flatscreen TVs and Blackberries to the credit-impaired – is seeking 30 high street stores. But that’s not all.
This week, M&S chief Marc Bolland showed that he realises how important high street stores are to elderly shoppers.
The first big point he made in his address to 2,000 Middle Englanders at the retailer’s AGM this week was that M&S remains committed to the high street. “We have 219 store in the high street which are doing well, we are the anchor of the high street and we are going to invest in [upgrading] our stores,” he said to welcoming nods of approval from oldies.
You can imagine the political stink if M&S “did a Mothercare” and abandoned lesser towns, some of which would probably never recover.
Primark, which reported positive trading figures this week, also thinks the high street is the best place to trade from, and stands to swell its floorspace by 10% in the next year, taking giant stores in Edinburgh and London’s Oxford Street.
Granted, you’d struggle to describe the latter as a high street, but finance director John Bason tells me that the high street’s “higher footfall and convenience” is what guides the chain’s property strategy.
Sports Direct also reported positive numbers this week. It is in the process of revamping its high street estate, and has freshened up its image by snapping up designer high street chains USC and Cruise, into which it will sink £20m of fresh capital.
So the retailers are still spending money on the high street – let’s hope the shoppers follow suit.
Property Week is calling for entries for the RESI Awards 2012 - a celebration of excellence in the residential sector. Taking place on 15 May 2012 at the InterContinental London, Park Lane, the RESI Awards will welcome leading figureheads to celebrate and network at this truly unrivalled industry gathering. For further information on the categories and entry criteria please follow this link.
I am currently standing in the C&W stand kitchen writing this it’s the only spare and quiet space on the stand!
Day two at BCSC has been busy everywhere, particularly on our stand during the wagamama feeding frenzy! All jokes aside we must thank wagamama for a superb effort at lunchtime today cooking food for over 300 people and spreading the word about the requirements for their ‘aggressive’ expansion over the next few years.
In the main conference, David Smith of the Sunday Times kicked off with a balanced view of the economy which was reinforced by Sir Richard Lambert (ex-CBI chief) who called for more entrepeneureal zip!
Kensington and Chelsea Council Leader (also local government chief) referred to the zip his council was putting into a new Exhibition Road area through his ‘naked streets’. Roger Madelin robustly rounded off the day suggesting that sex, from mixing cultures, occupations and uses, was the clear foundation for Kings Cross mixed-use development
All of the panel sessions were fully booked, with Next making themselves famous within the conference for their positivity regarding the market. It’s been highly refreshing to hear no mention of the double dip, people are clearly seeing a more upbeat outlook and are keen to get on and do business.
A great example of this is House of Fraser who impressed in their presentation with talk of their ‘affordable luxury’ offer, expansion into the Middle East, store refurbishments and their new UK offer ‘Buy and Collect’.
The first buy and collect store is opening in Aberdeen in three weeks and we’re working hard with them on the second store opening (location to follow). The freestanding stores will offer changing rooms and collection points, we can’t wait to give them a try!
In the exhibition hall it’s been very evident that the supermarkets are out in force this year with a lot of chat about Morrisons’ and Asda’s expansion plans. There is no question many developers are refreshing new and old development projects and out market testing occupational demand. Even if a small amount of this moves forward we can look forward to a leasing frenzy at BCSC in 2015.
Quality stands from Land Securities, CSC and Hammerson showcase the product, both existing assets and pipeline. All the principal UK multiple retailers are here, happy to talk shop. All in all, a good buzz around the place.
Everyone is gearing up for a big evening of drinks, dinner and networking.
After a quiet first couple of hours, giving a sense of opening night at the theatre, the BCSC conference has got off to a fantastic start with a busy first day.
The two big questions being asked are ‘what’s next in the retail development pipeline?’ and ‘what on earth are the police doing with fire extinguishers and bottles of beer outside the conference centre?!’
It’s been great to see so many retailers visiting our stand and it seems BCSC have got it spot on with the theme ‘evolve: time to think differently’ if the discussions going on about how to do things differently are anything to go by.
The retailer stands offer something for every appetite especially ‘food store corner’ where Tesco, Asda, Waitrose, The Co-Op and Morrisons are all going strong with their stands.
Interesting to see the different treats being offered by the stands this year, there’s literally something for everyone with Asda handing out doughnuts, Morrisons decorating their stand with fresh vegetables and Poundland lining the walls with boxes of chocolates!
One trend we’ve noticed already is the number of towns taking the initiative to come along to BCSC and exhibit. Northwich, Daventry, Peterborough, Newport, Woking, Tallaght, Guildford, Stoke, Scunthorpe, Evesham, Coventry and Warwickshire all getting in on the action.
We see this as the start of a new trend for the future with towns developing their brand rather than relying solely on developers, lets watch this space and see how many are here next year! The Realis/ City Sentral stand being a great example of town centre promotion.
We’ve embraced all things digital on the C&W stand this year with a social media display giving the latest updates on BCSC and the retail industry from Twitter, intriguing to see the human side of the conference with everything being tweeted from people’s journeys to Manchester and rumours of celebrity appearances from Vanilla Ice and CBeebies!
The QR codes issued by BCSC in the show guide are a great step forward too and it makes us wonder what technology will be in use at future BCSC conferences and indeed in the shopping centres of the future.
Welcome party starting in a minute, everyone in the mood to party and do some business.
Like 1800 other people, I am heading up to Manchester again for the BCSC Conference & Exhibition. It’s always a great event, pitched somewhere between academic and educational excellence, marketing and sales excess and party extreme. The bridge between all of the activities is the opportunity to network, socialise and banter!
The programme for the three days is built around the theme Evolve – time to think differently. I think BCSC have pitched that absolutely right given the challenges the retail industry currently faces. A difficult economy, stalled development programme and many declining high streets. This certainly requires a different approach and new thinking.
Kaye Adams TV and radio broadcaster will therefore have to work hard in her role as conference facilitator to draw out these new ideas, different thinking and most of all stimulate ideas around solutions.
The conference sessions will focus in particular on three themes:
Firstly, the economy and how the Government and industry can stimulate growth in the property sector.
Secondly, the ongoing debate regarding the benefits and drawbacks of the national planning framework and localism agenda under the Coalition Government.
Thirdly, the approach to regeneration and how to stimulate viable retail development and put some shape on the future of our town centres in the light of the Portas Review.
The emphasis in the exhibition hall has shifted from selling new development space, to a renewed focus on active asset management and recycling and enhancing existing assets. This has not stopped a sell out of the stands with the usual strong showing of the major property companies and agents, with retailers this year exhibiting being Asda, Poundland and Morrisons.
I will personally be interested to feel the “pulse” of the industry, and get a better sense of the consensus of where people think the best chance of renewed development activity will be – large city centre eg Sheffield or smaller market town centre eg Hinckley, where development proposals are on the blocks. Sources of development finance will be critical.
The opening of Stratford City this Tuesday is a fantastic boost and I will be interested to hear feedback on the scheme, and initial thoughts on potential retailer performance.
I was there for the opening and congratulations to all at Westfield, CPP and APG. It was a “stella” event. Particularly notable was the in-store atmosphere created by some of brands like The Sting, Apple and All Saints and by Westfield in the Great Eastern Market food hall area.
It will also be interesting to hear more context on the supposed occupational north/south divide. For me however, the key issue is the future role of some town centres in a social context, and in what form and quantity can retail play a part in that.
In many respects this offers to be an even more stimulating conference than previous events, where the focus was on regeneration through development boom and shifting large quantities of floor space. The issues facing the industry now are far more complex, highly political and socially challenging as evidenced by the recent riots around the UK.
It will be interesting to see how BCSC and particularly the exhibition evolves in the future, with perhaps the opportunity for local authorities and bodies interested in promoting town centres may be taking a more central marketing role?
Over the last 12 months, London has seen record levels of demand from international retailers of which a significant amount has been from French brands, drawn to London by the attraction of expanding in a new market alongside their domestic expansion. The two main clusters are in South Molton Street and Westbourne Grove , the streetscape now has a strong Parisian feel similar to that of The Marais, one of the hippest and most desirable shopping districts in Paris.
While some French brands such as Comptoir des Cotonniers and Zadig & Voltaire have been present in London for some time, there has been a wave of French retailer openings including Les Petites, Sandro, Maje, Isabel Marant and Aubade the luxury French lingerie brand shortly to open their first store on South Molton Street . Arguably the most ambitious and acquisitive of these are The Kooples, who have opened eight stores in London in the last year
Geography has played a key part in this trend as the majority of retailers continue to run their operations from Paris, with accessibility via the Eurostar enabling finding and managing shops in London comparable to that of Nice and other cities in the south of France.
Typically these brands require between 1,000 – 1,500 sq ft in prime locations and in some instances are prepared to pay significant premiums to secure the best stores, as illustrated by Sandro’s rumoured £800,000 premium for 6 Marylebone High Street. Their commitment to the London retail market has also been cemented not only by their acquisition of stores but by their wide-ranging and prominent advertising campaigns, such as The Kooples iconic couples appearing on the side of numerous black taxis and Zadig & Volatire and Les Petites London bus adverts.
This trend looks set to continue over the next year and there are a number of new French brands seeking to enter the market, including Tara Jarmon .Lets hope the French follow the retail trend with some more of their fabulous restaurants!
My only experience with Mary Portas came a few years ago when Liz Peace charged me with delivering some high profile exposure that didn’t involve having to get up at stupid o’clock for the Today Programme. After a few weeks of phone tennis, a filming slot was arranged on Mary's BBC Two series as part of our strategy to promote the flexibility of commercial landlords.
The producers wanted a rooftop location with a view over some shops which John Lewis kindly provided, and underneath torrential London rains we spent an entire afternoon filming a five-minute interview.
Sadly, the piece ended up on the cutting room floor and I have a hunch that karma’s likely to raise its weary head where Mary’s current ‘review’ of retail is concerned as well.
Why? Firstly, because in a political climate where the government’s very existence is pinned on creating growth, gunning down major retailers via the planning system to ‘protect’ high streets at the expense of jobs won’t wash. Those firms have too much power and besides, consumers have already voted.
Secondly, because you can’t gaffer tape a planning policy statement to the internet as much as many idealistic politicians would like to think you can.
Thirdly, as with most things governments do, this is a repacking of the whole needs test debate that was thrown out by Labour when it shied away from a fight with the industry.
Having being told that communities want to run their own schools or take on planners’ roles creating neighbourhood plans, many voters feel the government is simply trying to force Tory idealism of ‘village life’ upon it. But even in wealthy areas like Hampstead local independents are going under as people shy away from paying £8 for a slice of organic quiche. For the vast majority, the weekly shop destination is dependent solely on price.
Unless the government wants to nationalise certain types of high street outlets (which it could well end up doing by telling State-backed banks to ‘go easy’ on certain retailers), the reality is that the rash of empty shops will continue to spread. There are a number of other insolvencies on the cards and, as one very senior property figure put it to me, “Mary’s at risk of pushing water up a hill”.
But however commendable protecting independents may be, the view of most planning professionals is that it’s not the planning system’s role to regulate occupiers. “I’m not convinced it’s for the planning to do that,” says Addleshaw Goddard partner Marnix Elsenaar, who heads the planning and environment team. “We saw the changes around PPS6 – the policy around retail planning - when the needs test went as the government decided it wasn’t for it to interfere in the market.”
Another retail expert, Chris Green, a partner at planning consultants DPP agrees. “The planning system is there to control land use and not necessarily control fascias,” he says, calling for a more pragmatic approach around supporting the high street and attracting different activities.
“For a long period of time people resisted coffee shops and I think there’s a lot of caution when you get new formats and we need to be entrepreneurial in how we generate income from town centres.”
This is code for the newest trend which is seeing the expansion of large supermarkets into smaller, inner-city units. But while most high streets would welcome a John Lewis Metro – many would have different feelings for other brands, despite the obvious economics benefits they would all bring in terms of footfall for neighbouring shops. Do we therefore need to be a bit stricter around controlling what such shops could sell in a bid to protect local newsagents, clothing outlets or record stores?
Yet there’s still a risk that a government committed to empowering communities and cutting red tape could bring in a host of potentially damaging regulations, particularly where rents are concerned. The upward-only rent review debate is never far from view. But many will take the view that ministers should stick to improving the recycling of retail packaging rather than failed policies from days gone by.
HMV has certainly edged ahead of EMI in recent months in the race for which British music institution will be the first to fold. EMI sold off HMV nine years ago, but many will feel today’s eye-popping £240m bail-out is simply one final sweaty encore as the performance draws to a close.
Two years on from the summer of CVAs that saw Focus DIY, JJB Sports and a few others grab life-lines and we’ve seen them fold as many predicted at the time. Landlords rightly used it as an opportunity to show people they were willing to help and successfully batted back false claims they were to blame for the stores’ failures.
It’s fair to say though that the emotional pull of HMV – with memories of skipping school to buy the tunes that soundtracked our youth – is somewhat greater than that of sheds selling footy shirts and hammers. But something tells me HMV’s State-backed bank lenders don’t harbour any fond memories waiting outside to grab a first pressing of Morning Glory. They’d have been too busy watching Countdown.
One plus is that calls for those bailing out occupiers to get ‘something back’ seem to have been heard. With the banks grabbing 5% of the HMV, this could bode well next time landlords feel the need to agree a CVA. And the rumour mill suggests that a retailer with over 700 stores is close to toppling over, so there could be more tests to come.
However, with the British music industry undergoing such turmoil at the hands of pirates, iTunes and supermarket discounting, is the demise of our last remaining record chain simply an inevitability? Quite possibly.
HMV dumped Waterstones for 82% less than it paid WHSmith back in 1998, but sales trends for records and DVDs are going the same way as books. Faster broadband products – like BT Infinity – and the increasing use of entertainment hubs don’t paint a rosy picture for physical media sales. Kids these days don’t do b-sides.
No other retail sector has faced as much of a battering. The lucrative singles market has been wiped out and margins on what remains have been slashed at with a quarter of albums sold in supermarkets. Fierce price squeezing on this kind of scale is hurting not just HMV but labels and publishers too.
That said, why do you never see iPod fill-stations in HMV, where digital music lovers could purchase music and films digitally in-store with the swipe of their credit cards? Why were no music communities set up around HMV branches, using sites like MySpace or Soundcloud, harnessing the massive interest in online music to maintain footfall? And why didn’t they stick a few quid into vintage guitars – the best performing asset class in the world?
The point is that HMV has missed many tricks here to capitalise from an online boom in the real world. It has prime retail pitches across the UK, but what use have they made of them? Hopefully, the two-year maturity of today’s deal with give them time to sort themselves out, let’s hope they can work it out.