Tight planning restrictions pose the biggest threat to UK retail development not upward-only rent reviews and long leases, it was claimed this week.
Speaking at the MAPIC retail conference in Cannes, CBRE’s head of research, Peter Damesick, said the government’s clampdown on out-of-town development, rather than the country’s lease agreements, was to blame for turning retailers off the UK.
Damesick said landlords were becoming more and more flexible. The average lease length was now just eight years, while breaks in leases were also becoming more common, he claimed.
“Retailers are concerned about property costs and leases are being attacked as the source of the problem, but they are not,” said Damesick. He argued that high retail rents were caused primarily by lack of supply in the marketplace, which was caused by restrictions on development.
Damesick admitted that landlords’ compliance with the voluntary code of practice for commercial leases had been patchy, but added that there were “enlightened landlords”, who were providing a substantial amount of flexibility.
He said: “If there is a ban on upward-only rents it will not do anything about reducing rents. You could see rent reviews going up as landlords seek compensation.”
A final report from Reading university on UORRs is due in December. A government response is expected in the spring.
References: EGi Legal News 19/11/04
