River Island property boss: ‘Landlords don’t entirely understand retailers’
The property director of River Island has said concerns among retailers that landlords “don’t entirely understand” their businesses are hampering collaboration between parties as they look to recover from the pandemic.
Retail, leisure and hospitality occupiers and landlords are striving to improve their relationships through initiatives such as turnover-based leases, as pandemic-driven financial pressure mounts on both sides.
However, River Island’s Frances Baker said there are some “adversarial” aspects around sharing turnover data in the wider market.
The property director of River Island has said concerns among retailers that landlords “don’t entirely understand” their businesses are hampering collaboration between parties as they look to recover from the pandemic.
Retail, leisure and hospitality occupiers and landlords are striving to improve their relationships through initiatives such as turnover-based leases, as pandemic-driven financial pressure mounts on both sides.
However, River Island’s Frances Baker said there are some “adversarial” aspects around sharing turnover data in the wider market.
Speaking on a panel session hosted by property management firm PM+U, Baker said she expects most of River Island’s new leases to incorporate a turnover element. She recounted her own experience of board discussions debating whether landlords would “try and tell [them] what [their] margins should be” if they disclosed those figures.
“I have had conversations with landlords in the distant past, where they tried to tell me how to run the store and what margin we should be getting,” she said. “There is a piece around that which makes some retailers quite nervous about sharing information.”
Baker added that there was also “some concern among retailers” over the ways in which landlords are handling turnover information, and whether it would drive rents up.
According to Carl Foreman, managing director at PM+U, some owners “are not seeing the benefits” of learning why a retailer is performing well or underperforming. “It’s sad, but we have to keep working at it,” he said.
For Adam Coffer, chair of the Property Owners Forum and managing director of EPF Investments, trust over sharing data goes both ways, particularly where smaller owners of individual high street stores are concerned.
“There has been an enormous problem with unscrupulous tenant behaviour… typically private equity-backed, [where some are] not just jumping down the CVA route, but simply ignoring landlords and not collaborating with them,” said Coffer.
“If you’re in a situation where you have so many tenants with that mindset, how can you expect landlords [without] the wherewithal of a huge institution, a landed estate or a large REIT to be able to trust a tenant to analyse the information they are providing?”
The spotlight has been on the relationship between landlords and tenants in recent weeks, as both await a decision from the government on whether to ease restrictions on commercial tenant evictions at the end of this month.
Earlier this week, Landsec chief executive Mark Allan and British Land chief executive Simon Carter proposed lifting the ban, while ring-fencing pre-June rent arrears for six months. This period would be used to negotiate plans for repayment, with a “backstop” of binding arbitration if talks fail.
UKHospitality chief executive Kate Nicholls this week called for an extension of the eviction moratorium and for landlords to “equally share the pain” with businesses by writing off 50% of rent debt for closure periods.
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