Shopping Centres & Leasing
Shopping Centres have seen an intensification of challenges that we were facing some time prior to the pandemic. The show will definitely go on, with fewer but fitter operators occupying less but better quality floor space.
Working with various shopping centre owners, we spent a significant amount during the first lockdown helping to understand the needs of occupiers. In a lot of cases, we worked through various restructuring initiatives in an attempt to try to ‘share the pain’ of the pandemic. It is an easy line to say out loud, but is clearly underpinned by jobs and livelihoods being at stake.
It is clear that resolutions on outstanding arrears will continue to be a major feature of negotiations well into 2021, whether it be by way of compromise, via regears and staggered rent repayments or in a worst-case scenario, head in the sand.
CVA’s will sadly continue to hit shopping centres, particularly in the fashion sector which has been significantly impacted with over supply, based on too many operators in too many stores alongside a major softening of consumer demand.
We are excited to see a changing of the guard, with a new breed of occupiers emerging. Independent and local operators will eventually evolve into national success stories. They key for shopping centre owners is to provide them with the flexibility of space in which to grow.
”Independent and local operators will eventually evolve into national success stories.” Damian Sumner
Our shopping centre leasing instructions are seeing strong demand for occupiers across a range of uses. Whilst there are reasons to be positive, a greater amount of expertise and resource will be required from leasing agents. Identifying and capturing independent occupiers, nurturing their interest often with a good deal of hand holding to get transactions across the line, all takes time.
Some of the projects we are involved with have taken us into new territories, it has been genuinely refreshing to see first hand the level of entrepreneurial activity that is alive and kicking throughout the UK.
At Barons Quay, Northwich the leasing team have been responsible for securing deals with The Coffee House, Ice Cream Farm, BEAR, Geek Retreat and Puddle Ducks. Each represents ‘best in class’ providing the local catchment with a different but cohesive reason to visit.
Sitting alongside more established fashion names, these occupiers present a real point of difference for the scheme, giving customers a very clear reason to come back time and time again for the shared experience.
”The real challenge for owners is to fill large space left behind by the demise of some of the mid-market fashion operators.” Damian Sumner
At our schemes in Harlow and Basildon, we are leasing to non-retail uses including The Department of Work & Pensions and the NHS. We are generally seeing an increase in community and wellbeing uses as an obvious response to the effects of pandemic.
The real challenge for owners is to fill large space left behind by the demise of some of the mid-market fashion operators. Traditional grid lines make it difficult to split some of the units and as such the flexibility of space will be increasingly important in future design. The role of the leasing agent has to be more than just space filling, asset management will be a skill set in increased demand with the ability to plot out a clear strategy to meet future demand. In a lot of cases this will ultimately involve reducing down supply.
Flexibility and affordability were key drivers of negotiations well before the pandemic. There is no doubt that we will continue to see an increased move towards shorter lease and turnover orientated transactions. This however has to be a two-way street, requiring collaboration between landlord and tenant, based on clear lines of communication and transparency.
Repurposing is the magic word that everyone is talking about at the moment and there is no doubt that retail stock will be circled by a whole host of alternative uses both commercial and residential, mainstream and specialist. All of that said, there is only a limited proportion of retail floor space that will lend itself to a viable refurbishment or alternative uses.
A number of repurposing strategies are focused on replacing traditional department stores as anchors to shopping centres. The size of department stores at least increases the viability of redevelopment and provides flexibility for a range of uses whether the space is split horizontally or vertically.
The redevelopment of the Eastgate Shopping Centre
We are acting for Infrared Capital Partners/Sovereign Centros who have submitted a planning application for the redevelopment of Eastgate Shopping Centre, Basildon as a pivotal part of the wider regeneration of the town centre.
Part of the proposals involve demolition of Debenhams replaced with new high rise residential blocks, with retail/leisure uses at ground/first floor.