2020 Retailers in trouble thread
Discussion
Slagathore said:
The reality is was have an enormous amount of choice nowadays, and all the retailers offering the same tat but from a shop can't compete with the online retailers. That and supermarkets now sell a massive variety as well, it's not hard to see why there is less demand from the smaller high street retailers.
Amazon's dominance and prices certainly won't be helping either.
Property, either commercial or domestic has always been a pretty reliable form of investment for people playing the long-term game, and there is too much of an interest in maintaining ever increasing rents or values.
All these massive shopping centres have probably been financed based on a certain level of income from the rents, but the reality is, the market can't/won't pay that anymore, and that was becoming clear even before coronavirus.
Case in point, but I'm sure if you look around your own local areas you'll find more examples:
https://www.realla.co.uk/details/12783073
Cabot circus opened around 2008, so looks like the original lease was £265k PA for 15 years. Now asking £180k, and I suspect will take a while to let, regardless of Coronavirus.
Then the rates - its Rateable Value has never been more than £170,000 and is currently £136,000, so if that is reflection of the actual open market rental value, the rents are massively optimistic.
Good points. Part of the problem is the consumer market moves faster than the real estate market. Amazon's dominance and prices certainly won't be helping either.
Property, either commercial or domestic has always been a pretty reliable form of investment for people playing the long-term game, and there is too much of an interest in maintaining ever increasing rents or values.
All these massive shopping centres have probably been financed based on a certain level of income from the rents, but the reality is, the market can't/won't pay that anymore, and that was becoming clear even before coronavirus.
Case in point, but I'm sure if you look around your own local areas you'll find more examples:
https://www.realla.co.uk/details/12783073
Cabot circus opened around 2008, so looks like the original lease was £265k PA for 15 years. Now asking £180k, and I suspect will take a while to let, regardless of Coronavirus.
Then the rates - its Rateable Value has never been more than £170,000 and is currently £136,000, so if that is reflection of the actual open market rental value, the rents are massively optimistic.
I wouldn't rely too much on rateable values - a lot more to how they are arrived at than just rents.
And news just in - John Lewis are closing 8 stores, including their Grand Central store at the Bullring and 6 At Home stores. One is the Intu Watford unit - losing your anchor tenant is the last hing that lot want.
Grand Central is a real killer - big loss of face for them given the fanfare and it anchors that development.
Slagathore said:
The reality is was have an enormous amount of choice nowadays, and all the retailers offering the same tat but from a shop can't compete with the online retailers. That and supermarkets now sell a massive variety as well, it's not hard to see why there is less demand from the smaller high street retailers.
Amazon's dominance and prices certainly won't be helping either.
Property, either commercial or domestic has always been a pretty reliable form of investment for people playing the long-term game, and there is too much of an interest in maintaining ever increasing rents or values.
All these massive shopping centres have probably been financed based on a certain level of income from the rents, but the reality is, the market can't/won't pay that anymore, and that was becoming clear even before coronavirus.
Case in point, but I'm sure if you look around your own local areas you'll find more examples:
https://www.realla.co.uk/details/12783073
Cabot circus opened around 2008, so looks like the original lease was £265k PA for 15 years. Now asking £180k, and I suspect will take a while to let, regardless of Coronavirus.
Then the rates - its Rateable Value has never been more than £170,000 and is currently £136,000, so if that is reflection of the actual open market rental value, the rents are massively optimistic.
I think the rents are going to go a lot lower than that. Especially in commercial areas. People have started to solve the "working from home". In spite of the fact that we're all supposed to be at work the City and West End are deserted. Yes it'll creep back slowly but I'm not sure it'll ever return to post Covid.Amazon's dominance and prices certainly won't be helping either.
Property, either commercial or domestic has always been a pretty reliable form of investment for people playing the long-term game, and there is too much of an interest in maintaining ever increasing rents or values.
All these massive shopping centres have probably been financed based on a certain level of income from the rents, but the reality is, the market can't/won't pay that anymore, and that was becoming clear even before coronavirus.
Case in point, but I'm sure if you look around your own local areas you'll find more examples:
https://www.realla.co.uk/details/12783073
Cabot circus opened around 2008, so looks like the original lease was £265k PA for 15 years. Now asking £180k, and I suspect will take a while to let, regardless of Coronavirus.
Then the rates - its Rateable Value has never been more than £170,000 and is currently £136,000, so if that is reflection of the actual open market rental value, the rents are massively optimistic.
It's a whole new world. Look at Pret, the darling of the sandwich bars, it seemed they could do no wrong pre Lockdown but now they're shedding stores as the workers ain't coming back any time soon.
The quickest way of returning to normality would have been to reopen the schools back at the beginning of June. Kids are of virtually zippo risk, it was only the lefty Teachers Unions that scuppered it. Can't see a labour government dealing with that. Now we're into the holidays it'll be 6 months before returning to "normal" which makes the world we live in today the new normal.
This massive problem is not going to go away and needs more than kicking the can down the road as we are at the moment. We're a tenant in several locations and whilst I'm using everything I can to reduce overheads I do have some sympathy for Landlords at the moment. I never thought I'd be saying that.
The whole, retail / commercial property sector is in a downward spiral that will screw not just the high street but pensions and the commercial sector. It needs something pretty bold.
Intu are just the first because they were the weakest going in. They'll be a lot more going forward.
Edited by Harry H on Thursday 9th July 11:00
Castrol for a knave said:
Good points. Part of the problem is the consumer market moves faster than the real estate market.
I wouldn't rely too much on rateable values - a lot more to how they are arrived at than just rents.
And news just in - John Lewis are closing 8 stores, including their Grand Central store at the Bullring and 6 At Home stores. One is the Intu Watford unit - losing your anchor tenant is the last hing that lot want.
Grand Central is a real killer - big loss of face for them given the fanfare and it anchors that development.
blimey, that's a massive blow to grand centralI wouldn't rely too much on rateable values - a lot more to how they are arrived at than just rents.
And news just in - John Lewis are closing 8 stores, including their Grand Central store at the Bullring and 6 At Home stores. One is the Intu Watford unit - losing your anchor tenant is the last hing that lot want.
Grand Central is a real killer - big loss of face for them given the fanfare and it anchors that development.
Slagathore said:
Just had a browse on that site, a lot of new retail units coming up for rent in last couple of weeks, so retailers quitting instead of toughing out covid.Edited by hyphen on Thursday 9th July 11:07
Castrol for a knave said:
Good points. Part of the problem is the consumer market moves faster than the real estate market.
Excellent point.Castrol for a knave said:
I wouldn't rely too much on rateable values - a lot more to how they are arrived at than just rents.
Rates are set by the LA, who are even slower to react than the real estate market - possible the slowest reaction time in the known universe in fact. they will wait until a town centre is all dust and tumbleweeds before realising they have a situation to deal with.In the case of B'ham council, f
k 'em. They've made it progressively 'worse' for car drivers, to the point that my trips there decreased to zero per year about 2 years ago.For balance, industrial along with warehousing and distribution and hi-tech sectors are performing well. Sensible levels of rental growth, yields aren't too steamy, good stock and pipeline. Sensible developers and landlords.
Of course, Covid is now in the mix, but we are not seeing too great a fall in investor and occupier demand (not my core markets admittedly). Allied to that, with the rise in online shopping, modern high bay kit is very much in demand.
A decent investment portfolio manager will only hold a limited tranche of high street retail - it has always been higher risk, out of town retail more so. Shopping centres have not been a preferred vehicle for a while, which is why several have found their once high end pension fund landlords have shipped them out to the smaller investment houses.
Digga said:
Castrol for a knave said:
Good points. Part of the problem is the consumer market moves faster than the real estate market.
Excellent point.Castrol for a knave said:
I wouldn't rely too much on rateable values - a lot more to how they are arrived at than just rents.
Rates are set by the LA, who are even slower to react than the real estate market - possible the slowest reaction time in the known universe in fact. they will wait until a town centre is all dust and tumbleweeds before realising they have a situation to deal with.In the case of B'ham council, f
k 'em. They've made it progressively 'worse' for car drivers, to the point that my trips there decreased to zero per year about 2 years ago.Rates - to be fair to Local Authorities, they don't set the RV - that falls to the Valuation Office. Not as glacial as they used to be and to be honest, they are receptive to rapid changes in local markets (being one of the grounds to challenge the list and achieve a reduction in RV).
rover 623gsi said:
Castrol for a knave said:
Good points. Part of the problem is the consumer market moves faster than the real estate market.
I wouldn't rely too much on rateable values - a lot more to how they are arrived at than just rents.
And news just in - John Lewis are closing 8 stores, including their Grand Central store at the Bullring and 6 At Home stores. One is the Intu Watford unit - losing your anchor tenant is the last hing that lot want.
Grand Central is a real killer - big loss of face for them given the fanfare and it anchors that development.
blimey, that's a massive blow to grand centralI wouldn't rely too much on rateable values - a lot more to how they are arrived at than just rents.
And news just in - John Lewis are closing 8 stores, including their Grand Central store at the Bullring and 6 At Home stores. One is the Intu Watford unit - losing your anchor tenant is the last hing that lot want.
Grand Central is a real killer - big loss of face for them given the fanfare and it anchors that development.
God this is horrible - it’s depressing now / we’ve had enough and reality is we’ve not even remotely started.
At what point will the jobless cause runs on Banks ie too many with loans mortgages PCPs and no job and no way of getting one to pay for it.
Will banks look to 3-5 years zero mortgage payments/mortgage holiday and hope vaccine comes and comes fast enough then rebuild the working workforce
At what point will the jobless cause runs on Banks ie too many with loans mortgages PCPs and no job and no way of getting one to pay for it.
Will banks look to 3-5 years zero mortgage payments/mortgage holiday and hope vaccine comes and comes fast enough then rebuild the working workforce
Welshbeef said:
God this is horrible - it’s depressing now / we’ve had enough and reality is we’ve not even remotely started.
At what point will the jobless cause runs on Banks ie too many with loans mortgages PCPs and no job and no way of getting one to pay for it.
Will banks look to 3-5 years zero mortgage payments/mortgage holiday and hope vaccine comes and comes fast enough then rebuild the working workforce
How do you rebuild the working workforce ?At what point will the jobless cause runs on Banks ie too many with loans mortgages PCPs and no job and no way of getting one to pay for it.
Will banks look to 3-5 years zero mortgage payments/mortgage holiday and hope vaccine comes and comes fast enough then rebuild the working workforce
1- online shopping is/has killed off the high st , so where are all the shop staff going to be employed ?
2- working from home is going to become more common so all the cafes etc in cities whose going to be using them now and when they go bust where are those staff going to get jobs ?
jammy-git said:
lampchair said:
Just think if uncle Corbs had been in power for say 2 yrs before COVID, 2years of money burning and then COVID hits... 
I guess he'd have to find the same magic money tree that the Tories have found.
egor110 said:
Welshbeef said:
God this is horrible - it’s depressing now / we’ve had enough and reality is we’ve not even remotely started.
At what point will the jobless cause runs on Banks ie too many with loans mortgages PCPs and no job and no way of getting one to pay for it.
Will banks look to 3-5 years zero mortgage payments/mortgage holiday and hope vaccine comes and comes fast enough then rebuild the working workforce
How do you rebuild the working workforce ?At what point will the jobless cause runs on Banks ie too many with loans mortgages PCPs and no job and no way of getting one to pay for it.
Will banks look to 3-5 years zero mortgage payments/mortgage holiday and hope vaccine comes and comes fast enough then rebuild the working workforce
1- online shopping is/has killed off the high st , so where are all the shop staff going to be employed ?
2- working from home is going to become more common so all the cafes etc in cities whose going to be using them now and when they go bust where are those staff going to get jobs ?
k out of the way and lets businesses get on with it. Any attempt to prop up or encourage is fraught with unintended consequences and opportunity costs.the latest "add a trainee" wheeze being one of them. Businesses recruit only if they thrive and grow and often as part of investment too. You need to minimise taxes and maximise capital allowances and the market will take car of the rest. There's no instant, magic bullet.
egor110 said:
How do you rebuild the working workforce ?
1- online shopping is/has killed off the high st , so where are all the shop staff going to be employed ?
2- working from home is going to become more common so all the cafes etc in cities whose going to be using them now and when they go bust where are those staff going to get jobs ?
We need to train them into the future sectors 1- online shopping is/has killed off the high st , so where are all the shop staff going to be employed ?
2- working from home is going to become more common so all the cafes etc in cities whose going to be using them now and when they go bust where are those staff going to get jobs ?
People are will become tired of WFH full time so if we can do part time WFH maybe 3 days a week or two or any blend to support.
Otherwise we’re f
ked. Other countries say Germany and the Med reliant on U.K. in a massive way of buying stuff and holidays are too going to be screwed. U.K. and every country if there is no demand at all then we don’t need to supply or the cost to supply is so high no one would buy it.
Run on banks would be the outcome
Welshbeef said:
egor110 said:
How do you rebuild the working workforce ?
1- online shopping is/has killed off the high st , so where are all the shop staff going to be employed ?
2- working from home is going to become more common so all the cafes etc in cities whose going to be using them now and when they go bust where are those staff going to get jobs ?
We need to train them into the future sectors 1- online shopping is/has killed off the high st , so where are all the shop staff going to be employed ?
2- working from home is going to become more common so all the cafes etc in cities whose going to be using them now and when they go bust where are those staff going to get jobs ?
People are will become tired of WFH full time so if we can do part time WFH maybe 3 days a week or two or any blend to support.
Otherwise we’re f
ked. Other countries say Germany and the Med reliant on U.K. in a massive way of buying stuff and holidays are too going to be screwed. U.K. and every country if there is no demand at all then we don’t need to supply or the cost to supply is so high no one would buy it.
Run on banks would be the outcome
Castrol for a knave said:
Good points. Part of the problem is the consumer market moves faster than the real estate market.
I wouldn't rely too much on rateable values - a lot more to how they are arrived at than just rents.
And news just in - John Lewis are closing 8 stores, including their Grand Central store at the Bullring and 6 At Home stores. One is the Intu Watford unit - losing your anchor tenant is the last hing that lot want.
Grand Central is a real killer - big loss of face for them given the fanfare and it anchors that development.
Yeah, I think there's maybe some stubbornness to these large companies around change. The high Street model for small and large retailers seems to have changed a lot and some don't seem to have adapted as well as others.I wouldn't rely too much on rateable values - a lot more to how they are arrived at than just rents.
And news just in - John Lewis are closing 8 stores, including their Grand Central store at the Bullring and 6 At Home stores. One is the Intu Watford unit - losing your anchor tenant is the last hing that lot want.
Grand Central is a real killer - big loss of face for them given the fanfare and it anchors that development.
I think we'll still see a lot of brands in the big shopping centres, but either in smaller units, or at much reduced rents. That would seem to make sense from a demand point of view. It seems big shops with lots of stock is probably not the best way to go. Smaller shops with a more specific stock, that people actually still go to a shop to buy would make sense.
Boots loses 4000 jobs with shop closures.
John Lewis and Boots to cut 5,300 jobs and shut shops https://www.bbc.co.uk/news/business-53348519
John Lewis and Boots to cut 5,300 jobs and shut shops https://www.bbc.co.uk/news/business-53348519
Digga said:
ates are set by the LA, who are even slower to react than the real estate market - possible the slowest reaction time in the known universe in fact. they will wait until a town centre is all dust and tumbleweeds before realising they have a situation to deal with.
In the case of B'ham council, fk 'em. They've made it progressively 'worse' for car drivers, to the point that my trips there decreased to zero per year about 2 years ago.
Don't talk to me about councils especially when it comes to planning. In the case of B'ham council, f
k 'em. They've made it progressively 'worse' for car drivers, to the point that my trips there decreased to zero per year about 2 years ago.One of our locations whilst a reasonably strong high street still had two adjacent shopping centres virtually empty mainly occupied by charity shops. John Lewis wanted to come to town so instead of using one of the shopping centres they built a whole new retail park just outside, free parking the lot.
No surprises that footfall on the high street started to drop and as a consequence their parking revenue. Their solution, put the parking charges up to replace the revenue.
FFS, no one surely could be that incompetent, it can only be down to brown envelopes right at the top.
Another location with already an unoccupied high street decided to build another shopping centre adjacent to the existing one separated by a busy main road. No more shoppers just same amount split between two now so both centres are empty. Literally every one told them about the disaster about to happen righ at planning stage but no, they knew better. Can only be brown envelopes again. Or they're all on a different set of drugs to the ones I'm taking
Also, businesses contract in tough times and expand in better times. Let's not assume all these places are closing for good, they are just closing now because now is when they have the problems. New stores will open up and online will be a bigger factor but it's not a death knell for the high st.
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