Retail leasing revived by new concepts
Dom Millar is Chief Executive of The Completely Group, a digital marketing and events company that runs the UK’s leading retail & leisure property listings portal CompletelyRetail.co.uk. In this piece, Dom shares what he’s hearing from Retail landlords and agents and how the face of retail space is evolving.
I’ve worked in the retail property sector for over 20 years and I’m very fortunate to have made a lot of good friends in the industry. Over the past 15 months or so I’ve tried to touch base with as many of them as possible, checking-in and comparing war stories.
So you know how the calls go. After I’ve established how everyone is, that the family are OK, hear about the holiday plans that have been cancelled, I ask ‘how’s business?’ with some trepidation.
When talking about the state of the market my agent friends have used words like ‘fragile’, ‘difficult’ and of course ‘we’re doing twice the work for half the fees’. But whilst no one has clearly had a record year, many of the agents I’ve spoken to have intimated that 2020/21 has been far from a retail armageddon. It’s all been OK, and actually much much better than OK in many cases.
So where are all these deals coming from? Where is this flourish of fresh occupiers coming from during an economically crippling pandemic?
Well for starters according to the Local Data Company’s (LDC) 2020 Market Analysis Report, there were over 1,500 new barbers, beauty and nail salons openings in 2020, which is incredible considering they weren’t allowed to open their doors for half the year. We must all need a bit more grooming and pampering?
According to the same report grocery and convenience stores, pharmacies, take-aways and gyms dominated the major brand expansions which probably reflects another recent change in our lifestyles. Pure Electric’s e-bike and e-scooter shops expanded from 3 to 14 stores in 2020, and they’ve already opened a further 5 this year.
The prime pitches were snapped up across the UK after many household names sadly disappeared. I’ve heard of several cases where new tenants have paid well over market rates for a recently vacated store – the incoming brands clearly confident of success where others have failed.
Then there’s the ‘let’s do something completely different’ spaces, and let’s face it there’s no shortage of opportunities out there to try something new.
Local agents I’ve spoken to are taking more and more calls from independent brands and local entrepreneurs. Plastic free shops, gift shops, wine and cheese shops, bars, takeaways and, of course, coffee shops. With sensibly priced rents and a genuine desire from people to shop more locally, there’s arguably never been at better time to open a local shop.
And what about temporary space and pop-ups?
There are exciting things happening within the temporary space sector and it’s the obvious way to provide something fresh for a week, a day, or even a couple of hours. It’s often a lot of hassle for landlords to curate temporary space and make it pay for itself. Indeed it can often be a significant initial investment for them, but there are number of specialist firms out there that can help.
Hammond Associates is a well established business that specialise in providing temporary space for local artists and community-based charities whilst limiting the landlords’ costs on the vacant spaces they curate. They look after around 400 vacant commercial units all over the UK and work with many of the leading landlords.
Probably the best known pop-up operator, Appear Here, are more commercially focused and tend to concentrate on major city centres / larger shopping centres. This is presumably because they’ve found that it doesn’t stack up financially for them to work in smaller towns, or perhaps the types of international brands they work with don’t want to appear in an average high street.
Again, currently only in prime locations, Sook offer retail and event space by the hour with digital walls and modular furniture. It’s really impressive; the flexible space can be a yoga studio in the morning, a shop the afternoon, and a gallery in the evening. Sook currently operate four spaces in London, Cambridge and Edinburgh, with four more opening by the end of this year. Surely all town centres could use a space like this for product launches, local crafters and makers, producers and artists?
Wembley Park’s Marketplace store offers an even more granular retail experience by stocking locally produced artisanal food, hand-crafted fashion, homewares and wellness products. It’s ‘sustainable retail made easy’ and helps local start-ups and more established independent retailers.
Consumer behaviours have changed
As our commuting and working habits change there are more flexible work spaces popping up in regional towns and shopping centres. A couple of years ago you’d only find the ultra-cool co-working spaces in the major cities. You know the types of places; fresh fruit in the water cooler, beer fridges, Muffin Tuesdays etc. But now both new and well established brands like Regus are expanding into town centre retail property, which can only be good for footfall. Even the NHS have started to open town centre walk-in centres in former retail sites in high streets and shopping centres.
But there are some parts of our towns and cities that simply have too much retail space and major redevelopment is the only answer. In pretty much every UK town where we see a bleak row of empty shops, there will be a developer that sees an opportunity to create something new. Many of the larger landlords are looking at downsizing and changing the use of some of their larger retail assets. For example Hammerson is planning to convert the former Debenhams at Highcross Shopping Centre in Leicester into a 300-bed, build-to-rent scheme. The repurposing of the former Debenhams, House of Fraser and BHS stores across the UK seems to have become a specialist new industry in itself. There are some creative plans afoot that will help to bring new life; retail, offices, homes, restaurants and bars to 100s of towns and cities, often in one huge multi-story chunk.
To quickly summarise: there’s a lot going on out there!
This piece was first published for Innesco’s Paperclip newsletter – a leading integrated marketing communications agency, driving value and growth for their our clients since 2009. Experts in real estate and the built environment.