Colliers International has proposed a five-point “radical reshaping” in leases to address the ongoing retail crisis in the UK.
In its Midsummer Retail Report, the firm said the industry needs a solution to retailers shedding stores, which will help retailers, landlords and investors.
To do so, it has proposed:
■ Standard five-year leases granted outside of the 1954 Landlord & Tenant Act.
■ Rents based purely on the turnover achieved by the retailer in a particular shop.
■ Mutual options to break the lease dependent on agreed turnover thresholds.
■ A “white box” approach to shop specification where a basic fitted unit is made available to the retailer to minimise their fit-out.
■ Limited incentives/rent free.
Colliers said these types of features are relatively common in the retail factory outlet environment, but have not been adopted by the mainstream market.
However, it also added that the model would not be relevant in some cases, including in fragmented ownership high streets or for flagship stores.
Dan Simms, co-head of retail agency at Colliers, said: “We understand the inordinate pressures that retailers are currently facing as long-term structural changes to the retail market play out.
“But retailers, landlords and investors face equal challenges, and the way forward has to be an equitable approach which respects the situations of both. The property industry now needs to think about a radical reshaping of the lease model for much of our retail property.”
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