A survey of the owners of more than 120m sq ft of UK retail property has shown that 79 per cent believe the COVID-19 pandemic will bring permanent changes to how retail property is leased and the terms on which it is occupied.
Changes will be driven by an advanced use of data but landlords face challenges in terms of accessing the right data sets and must be willing to share this information with retailers if both sides are to benefit.
The survey lookedto establish how owners had adapted to the lockdown and how their strategy had changed in the face of the pandemic’s impact on the businesses occupying their assets.
Matthew Thompson, Head of Retail Strategy at Colliers International commented: “The insights from this survey demonstrate that the relationship between the landlords and occupiers of retail property is changing irrevocably. The challenge now for both sides of the equation is who can respond in a way that can sustain a contractual relationship which is viable for all parties”.
An increased use of data regarding footfall, trading turnover and how physical shops help to generate online sales are set to become new key metrics which influence the pricing of leases.
More than 40 per cent of landlords canvassed said that in future they are more likely to consider these factors when determining an asking rent.
Matthew Thompson comments: “Owners are under pressure to deliver high quality, high quantity footfall and brand prominence for their occupiers – and crucially, must be able to prove that their strategies are delivering.
“In this context, it’s clear that we’re going to move away from the old model of how shops have been rented out. In an environment that can integrate masses of relevant datasets, more precision can be brought to the pricing process and this will benefit both landlords and retailers.”
However, at present, the survey shows that many landlords are not yet in a position to apply data in to create a new leasing methodology.
Thompson comments: “Of the owners surveyed, around two thirds do not have access to the data which would enable them to measure who is visiting their properties; where these shoppers come from or the nature of their visits to shopping environments.. Even with the right data in place, close to 40% said they would still not be prepared to share these insights with occupiers in return for sales data.
“This unwillingness to share data between stakeholders needs to be resolved if a new model for retail property leasing is to emerge from the devastation of the pandemic.”