Over the past seven years the relationship between property and retail has improved and some stunning schemes have been built. But there remains much more to do.
Having spent six years as a property journalist followed by seven covering retail, it’s been interesting seeing the debate between retailers and their landlords from both sides of the fence. The relationship is always going to be fractious, not just because it’s a supplier-customer relationship, but because the two industries move at completely different speeds.
Property is a long term game. Schemes like Stratford take decades to put together, secure planning for, and develop. And once they have been built, shopping centres and retail parks are an investment which the owner wants to be a source of long-term secure income. Contrast that with the immediacy and pace of retail, the flexibility the trading environment demands and the focus on managing cost, and the inherent conflict becomes apparent.
But the property industry does deserve credit. In the old days retailers weren’t seen as customers and the relationship was almost feudal. That’s changed and the big landlords in particular have made massive strides in being more responsive to retailers’ requirements than they were, certainly the larger ones at least. Partly that’s been driven by market conditions and the need to fill empty space, but also by a realisation that in the modern retail world, those locations where the landlord and retailers aren’t fully engaged and singing from the same hymn sheet are going to struggle.
There remains a lot to do though. There’s still a sense of bemusement that rent is still paid on quarterdays determined by the medieval calendar, that upward only rent reviews are still the norm, that one crazy deal can shape the rental tone for a whole centre and that in most cases there is no link between performance of a centre and the rent paid. The pace of change is too slow - in Retail Week 21 years ago this week the BCSC conference was debating whether landlords would allow retailers to pay turnover-based rents, yet today they still remain the exception. For small, entrepreneurial retail businesses in particular, too often they find the odds are stacked against them.
Landlords will argue that the anachronisms work both ways, and for their part want the repeal of the security of tenure provisions in the 1954 Landlord and Tenant Act. Certainly the answers to the debate won’t come quickly and - as a glance through the Retail Week archives shows - the debates today haven’t changed a great deal. But the pressures of multichannel retailing demand the pace of change in the property owner-retailer relationship steps up. I’m not sure a lot of people in the industry recognise just how dramatic the impact on bricks and mortar retailing will be. It has a bright future for sure, but that future shape will be very different.
For my part this is the last of these weekly online property columns which I’ve been writing for the past few years. I’ve very much enjoyed being able to keep close to the retail property world during my time on Retail Week. There have been some stunning schemes built, like the two Westfield developments in London and Liverpool One, that have not just created great retail environments, but made a real impact on the places they serve and the lives of the people who work in them. Together, with the raft of new schemes developed since 2005, developers and retailers have shown the positive impact of retail at its very best.