Covid-19 and the rolling lockdowns have created significant issues for both tenants and owners of retail destinations. The reductions in trading time, social distancing requirements and an acceleration in the growth of online shopping as customers react to the pandemic have all had a consequential impact.
High street exits from the likes of Debenhams and Topshop has given rise to vacancies and will leave gaping holes in in the retail landscape. So how do you make sure your scheme is attractive to prospective tenants on the road back to normality? Perhaps we should look overseas for some insight.
“For owners of shopping centres, simply maintaining occupancy has been a challenge, let alone attracting and signing new occupiers,” says Peter Todd, founder at asset management company Portus Retail [pictured]. Despite these challenges, he says, at Docks Bruxsel in Brussels, Portus Retail has been able to sign and agree a number of terms in the past 6 months, including agreed terms or signed leases with 10 occupiers for a total of 71,850 sq ft – representing 13 per cent of the scheme’s retail and leisure space.
Signed brands include: Bel Chicken, O’Tacos, Hawaiian Poke Bowl, You Wok and Covers & More. In addition, terms have been agreed with a major homewares retailer and an international branded leisure operation. There have, says Todd, been several success factors in achieving this.
Despite lockdowns, he says, Docks Bruxsel has still traded relatively successfully, attracting 88 per cent of the footfall in 2019 and 98 per cent on a like for like basis – excluding the periods of all stores being required to close, putting it 20 per cent above the average benchmark for Belgium, as reported by the BLCSC.
Key to sustained footfall has been customer reassurance: “Throughout the pandemic we have focussed our operations on health and safety, social distancing and wellbeing,” Todd tells. “This has been reinforced through all communications and marketing including social media.”
Central to the scheme’s strategy for signing new tenants has been to target strong retail brands who have been able to operate and trade well through the pandemic, F&B tenants who operate take-out and delivery, and branded international leisure operators who have targeted Docks as a long-term strategic location for a store opening.
Todd says that taking a flexible approach to lease duration and terms has proven effective, such as offering either a longer or shorter lease duration than is standard to meet occupier requirements, rental agreements based upon turnover achieved, and stepped rental payments that rise over the duration of the lease.
Portus has also utilised tools like creating “white box” fit-outs to support short-term lettings and pop-ups to fill units and maintain a diverse spread of tenants that attract shoppers.
He adds: “Some sectors have consistently performed well, such as electronics, health & beauty and homewares. Despite this, the market for both tenants and owners remains very challenging especially in the fashion sector. With the implementation of vaccination programmes and keeping to the success factors stated above, the prospects for 2021 are far more positive.”
This story was originally published in Retail Destination Fortnightly. Subscribe here.