What does all of this mean for landlords and developers?įor investors who own large contiguous stretches of assets, like the old London estates or major shopping centres, the positive externalities we described earlier make the investment case stack up. short leases or licenses are an integral part of an attractive offer! Clearly this does not play well with a valuation methodology focused on income security and lease length, on an asset-by-asset basis. And in any case, a key part of a really strong eating out offer is an ever-rotating tenant mix e.g. The challenge for landlords is that often the most exciting food outlets are not the sort of tenants to sign up to long leases.
In short: Brixton Market has helped to create significant value for asset owners in the wider area in economic terms we could call this a positive externality. Prime high street rents in Brixton have, not incidentally, risen from sub-£150 psf Zone A in 2009 to almost £300 today. For example, Brixton has seen an explosion in town centre visitation since 2009, as Brixton Market has increasingly offered a strong and diverse food offer, and almost acted as an anchor store for the wider retail area. Some of the buzziest areas of London are characterised by their eating out offer. For ‘bricks and mortar’ retail in general, the food and beverage offer is increasingly the most influential part of the mix. It’s not just about shopping centres, however.
” The survey results came back with 79% of investors agreeing with the statement. In our 2015 research Property Futures, we posited the following hypothesis to investors: “the largest shopping centres to see 50% eating, drinking and leisure use. Indeed, investors believe this trend is likely to accelerate further, particularly in the large destination shopping centres. Something aptly illustrated by a leaf through the major shopping centre REITs’ investor reports, which show them to now be extremely focused on their food & beverage offer.įor example, Hammerson’s half-year 2016 results report that catering and leisure occupiers account for 14% of occupied space within its centres, up from just 6% five years’ previous. The ascent of which has impacted comparison goods shopping considerably, focusing consumers’ minds more on what physical retail is actually offering them, and forcing landlords to focus on a more ‘experiential’ retail offer.
In part, this is related to the growth of online retail. However, it seems only recently that Brits’ growing obsession with food has started to really impact strategic thinking in the property industry – most particularly with regards to the vital role that an eating out offer plays in the attractiveness of a wider retail area be it a shopping centre, retail park or high street.
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