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My hope for the high street after Covid19

 

Written by Andrew Martin | May 12th 2020
It’s no surprise to anyone when I say it’s been a tough few years for the high street. And now, the current crisis has accelerated the next couple of years of inevitable decline into just a couple of months. Whilst I know this is an incredibly difficult time for us all, I do believe that in the long term, this forced pause will create enough space for change. Change that our high street desperately needs to thrive once more.

 

To start, I think Landlords attitudes towards rental values will have to shift, making retail lets more accessible – thus preventing empty units. We’ve already started to see a change in recent times, with some rental periods reducing to 5 year terms and 3 year break clauses. Moving forward, I think terms will become shorter and break clauses earlier, but this would need to work in the favour of both tenants and landlords
I think a fairer way to approach the situation would be to price rentals on a percentage of the retailers’ turnover. Then, on top of creating even shorter break clauses, tenants are more likely to take opportunity as it’s low risk. Similarly, shorter break clauses would also allow landlords to swop tenants out if they didn’t perform well financially, protecting the risk in percentage / turnover rental deals. What we need to see is a balance struck between the retailer and landlord to ensure security and prosperity all round through win-win agreements.
Secondly, I think Landlords will have to invest more in their properties to make retailers lives easier (and cheaper). If landlords were prepared to provide ready-to-inhabit white box units, tenants wouldn’t need to have the capital required to fit out a store from scratch. Now more than ever, not only will the retailers not want to spend much Capex on fit outs – they simply won’t have the budgets to do so. Retailers funds can then be spent wisely to create the best possible brand experience, attracting more shoppers and creating higher footfall. Again, this approach would benefit both the retailer and the landlord.
So, whilst I think the amount of retail real estate is likely to reduce, what I hope is that the stores left will be of much better quality. I hope to see brands creating bespoke retail environments to create meaningful brand experiences, backed up by the strength of e-commerce. I think we’ll also see a rise in more transient retail spaces – spaces created with sustainability in mind, that can easily change every week or month by using digital branding and standardised fixtures.
Whilst it might seem daunting to look beyond the situation we find ourselves in, I think there’s an exciting, more dynamic high street waiting beyond Covid-19.

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