79% UK retail landlords say Covid-19 permanently changes leasing terms

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landlords colliers international covid-19
The surveys sought to determine how owners had adapted to the coronavirus lockdown
// 79% retail property owners in UK believe the coronavirus impact will change how property is leased
// Changes will likely be driven by an advanced use of data

A colossal 79 per cent of property owners throughout the UK who own more than 120 million sq ft of UK retail believe that the Covid-19 pandemic will bring permanent changes to how retail property is leased and the terms on which it is occupied.

Changes will likely be driven by an advanced use of data but landlords face challenges in terms of accessing the right data sets and must be willing to share this information with retailers if both sides are to benefit, Colliers International found.

The surveys sought to determine how owners had adapted to the coronavirus lockdown and how their strategy had changed in the face of the Covid-19 impact on the businesses occupying their assets.


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“The insights from this survey demonstrate that the relationship between the landlords and occupiers of retail property is changing irrevocably,” Colliers International head of retail strategy Matthew Thompson said.

“The challenge now for both sides of the equation is who can respond in a way that can sustain a contractual relationship which is viable for all parties”.

Meanwhile, an increased use of data regarding footfall, trading turnover and how physical shops help to generate online sales are set to become new key metrics which influence the pricing of leases.

Over 40 per cent of landlords said they are more likely to consider these factors when determining an asking rent.

“Owners are under pressure to deliver high quality, high quantity footfall and brand prominence for their occupiers – and crucially, must be able to prove that their strategies are delivering,” Thompson said.

“In this context, it’s clear that we’re going to move away from the old model of how shops have been rented out.

“In an environment that can integrate masses of relevant datasets, more precision can be brought to the pricing process and this will benefit both landlords and retailers.

“Of the owners surveyed, around two thirds do not have access to the data which would enable them to measure who is visiting their properties; where these shoppers come from or the nature of their visits to shopping environments.

“Even with the right data in place, close to 40 per cent said they would still not be prepared to share these insights with occupiers in return for sales data.

“This unwillingness to share data between stakeholders needs to be resolved if a new model for retail property leasing is to emerge from the devastation of the pandemic.”

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3 COMMENTS

  1. Landlords come across as greedy. All they want is the highest rents.
    If landlords weren’t so greedy, retail staff would be paid a better rate.

    Nightingale Hospital in London, the rent that was wanted for that was extortion, gladly the owners backed down after the amount was told in the news.

  2. It’s not just the rent though. Commercial rents that say quarterly in advance and upward only rents need to end. It should be based on turnover.

    The business rate system is long over due for reform to one based on values now post internet and post COVID world.

    It should also be based on how well the local retail economy is doing.
    Out of town should be billed for more.

    Finally, Councils should not be able to stop long vacant retail voids being split in to two units for A3/A4 use as a bar and restaurant even if there is housing on the top floor. I can think of one location in Kent that was previously Curry’s digital. It is a huge store, empty four years and the landlord a pension fund wants to convert to a pub and A3 unit. At the moment 2 applications were put forward but withdrawn and already people living near by are moaning about it. I think change of use should be taken away from local authorities because in the current retail environment there is no way a 13K sq feet unit for £340k a year will go to a chain for retail. It just isn’t going to happen.

  3. Central London Shop rents are at an all time high. during the past ten years or so occupiers’s shop relates profit have decreased. Over the past five years internet sales have increased to the extent that occupiers, in many cases, are already considering limiting their exposure to rent.
    Corvid has made it clear to me that I can generate greater profit on reduced turnover whilst at the same time enhance my lifestyle.

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