Right to Rent - Retail leases
Discussion
This popped into my inbox this morning:
https://www.blmforum.net/mag/councils-get-powers-t...
I am not really up to speed on retail leases, how does it work when the council auction off empty shop leases? Is the landlord forced to accept the new lease at the new rate even if it is loss making? Does the council subsidise it back to the landlord?
Surely the reason why these premises are empty is because the local environment makes them unprofitable to trade from, so how does this make it unravel positively?
https://www.blmforum.net/mag/councils-get-powers-t...
I am not really up to speed on retail leases, how does it work when the council auction off empty shop leases? Is the landlord forced to accept the new lease at the new rate even if it is loss making? Does the council subsidise it back to the landlord?
Surely the reason why these premises are empty is because the local environment makes them unprofitable to trade from, so how does this make it unravel positively?
In many cases these shops need works either by the landlord or by the tenant. The guidance does say there is central Govt. funding for the auction and legal process and there are Local Authorities offering capital grants which could be used to fund works. Bristol offer up to £10k I think. Sadly that doesn't go very far in a shop refurb.
I am sceptical if this will have any real benefits nationwide. It is only a pilot study initially in any case.
Trying to force landlords in to bad deals is not a good idea. Providing central funding to help viability however is a great idea. I look forward to seeing how this plays out.
I am sceptical if this will have any real benefits nationwide. It is only a pilot study initially in any case.
Trying to force landlords in to bad deals is not a good idea. Providing central funding to help viability however is a great idea. I look forward to seeing how this plays out.
Here’s more detail from .gov - https://www.gov.uk/government/publications/high-st...
I work in this sector (agency) and will also follow with interest to see how it plays out in reality.
My personal thoughts are that renting out shops just for the sake of it in areas which are already deprived and struggling isn't going to change the world or create an economy, as these units would already be occupied and thriving if there was consumer-lead demand.
A lot of enquiries we get on retail premises (in less than desirable areas) of say 500-1000sf are from vape stores, takeaways, nail bars, beauty salons, cafes and barber shops, so if these are the future occupants of these auctioned units then it doesn’t exactly scream massive success to me, particularly as so many of these are quite clearly just fronts for criminal activity.
I personally don’t see a fresh influx of new businesses suddenly desperate to secure a unit via auction, not when business rates, operating and refurbishment costs are the real underlying reason why a lot of larger retail premises remain vacant, certainly in the areas I work in, even when they’re advertised at market rent which is simply reflective of a complete lack of demand.
I work in this sector (agency) and will also follow with interest to see how it plays out in reality.
My personal thoughts are that renting out shops just for the sake of it in areas which are already deprived and struggling isn't going to change the world or create an economy, as these units would already be occupied and thriving if there was consumer-lead demand.
A lot of enquiries we get on retail premises (in less than desirable areas) of say 500-1000sf are from vape stores, takeaways, nail bars, beauty salons, cafes and barber shops, so if these are the future occupants of these auctioned units then it doesn’t exactly scream massive success to me, particularly as so many of these are quite clearly just fronts for criminal activity.
I personally don’t see a fresh influx of new businesses suddenly desperate to secure a unit via auction, not when business rates, operating and refurbishment costs are the real underlying reason why a lot of larger retail premises remain vacant, certainly in the areas I work in, even when they’re advertised at market rent which is simply reflective of a complete lack of demand.
Landlords generally dont want units empty, unless its part of a planned redevelopment and they are waiting for the remainder of the site to become vacant.
If there was a viable potential site then its likely they will have been found. In my opinion one of the biggest issues with retail is that there has been lots of retail development over the last couple of decades, but its in the main additional space, and the old space has not been repurposed. The fact there is additional retail space doesnt mean that we, the shoppers, have more money to spend. So effectively the same spend is spread over an increased retail area. That means some shops are uneconomic and close.
The space needs repurposing not auctioning
If there was a viable potential site then its likely they will have been found. In my opinion one of the biggest issues with retail is that there has been lots of retail development over the last couple of decades, but its in the main additional space, and the old space has not been repurposed. The fact there is additional retail space doesnt mean that we, the shoppers, have more money to spend. So effectively the same spend is spread over an increased retail area. That means some shops are uneconomic and close.
The space needs repurposing not auctioning
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