Today’s Times suggests landlords think the retail recession is over. That optimism might be misplaced.
Today’s Times business section leads with a rather breathless story that Land Securities is going to stop making concessions to retailers, such as allowing monthly rents on existing leases, because the market is moving back in favour of the landlords again. Hammerson and British Land are also quoted saying they feel the market is moving back in the property owners’ direction.
I’ve got a lot of time for LandSecs’ thoughtful chief executive Francis Salway, and he and his company are without question at the leading edge of new thinking in landlord/tenant relationships.
But I don’t see where the tenant demand that the story talks about is coming from. Indeed his company’s new centre in Cardiff, has opened with a lot of empty units, and I gather Hammerson’s new scheme in Aberdeen is going to be the same.
I spoke to Francis just now and his actual view is that the market is still tough, with the only exception being that there might be competition on a 5,000 sq ft unit in a handful of the biggest centres now, where there would have been little interest a while ago.
Otherwise he remains cautious and is right to. With VAT, business rates and unemployment set to go up next year, no retailers, certainly not in the non food market, are approaching the new year with anything but caution.
While new retailers are indeed coming in to the UK market, companies like Anthropologie and Hollister are only going to open a handful of stores and aren’t going to make up for the numerous retailers which have collapsed, or for those like Arcadia which are going to consolidate their store numbers.
So while today’s story might put a smile on the faces of the shareholders of the UK’s big three quoted property companies, no-one should be under any illusions that more major change still has to come.