“Tenants may be needing support well into next year,” said Shaftesbury chief executive Brian Bickell, “the traditional lease model is falling apart”
The sands continue to shift almost daily in the retail property market, leading to some industry models falling apart.
Announcements of swathes of store outlets and restructurings continue to come thick and fast this week, with West End landlord PLC () saying it is discussions with its 800 commercial tenants to agree “tailored solutions” on rents and charges.
The group, which owns swathes of property in Carnaby Street, Chinatown and Covent Garden, said one permanent change is already in place, with a move to rents being paid monthly in advance.
Management of the FTSE 250 group also said they expect a “continuing evolution in structure of leases”, which could lead to shorter lease lengths and a higher proportion of turnover-based leases.
“Tenants may be needing support well into next year,” said chief executive Brian Bickell. “The traditional lease model is falling apart.”
Not all retail is equal
Bickell believes ‘s prime London locations and the city’s “pre-eminent position amongst the world’s leading cities” will protect it in the long run and he may be right.
European giant Inditex saying that it will invest €1.7bn in switching from smaller stores to larger ones in — and reading from the same songbook — “the most strategic shopping districts of the world’s leading cities”.
The Zara and Massimo Dutti owner said it will close up to 1,200 smaller stores around Europe and other markets over the next couple of years as part of this restricting process.
This comes as part of a long stream of similar news, with UK retailers () and Monsoon Accessorize announcing plans on Wednesday to shutter many stores and renegotiate rents on others, a day after closures were announced by Debenhams and Signet Group, the owner of the Ernest Jones and H Samuel jewellery chains.
All in all, it indicates the acceleration of previous structural shifts in the retail and property sectors, as analysts at said in a note to clients.
Said the analysts: ‘“This time is different” may be over-used in financial analysis (and frequently wrong), but this time, we think the current pandemic is rapidly speeding up many of the trends in retail and sporting goods that were already going to occur.”
At Citigroup, number crunchers also believe that this time it’s different and also predicting that the global recovery for retail “may be more protracted than other sectors”.
“Retail and wholesale trade in Western Europe may not achieve the pre-coronavirus level of [gross value added] until early 2022,” they added, while suspecting that the US may not…