If landlords want to see their sites recover from the coronavirus crisis, they must prioritise making long-term partnerships over hard-lined rent demands, MCA’s The Conversation has heard.
Speaking at the event, Pizza Pilgrims non-executive director Ian Edward said that given how the crisis has revealed the unworkable nature of the current commercial rent model, it will hopefully prompt the “better, long-term landlords” to change their approach going forward.
“As operators and lessees, we can all get very upset about the way the property market has developed over the last 20 years,” he said. “Upward only rents, people pushing and taking rental uplifts from the latest tenant who’s paid a ridiculous amount of money to come in.”
“But what I think has come out of this, is that a number of the big landlords have gone bust. And so, some of the better long-term landlords are already thinking way ahead.”
According to Edward, a selection of the “grown-up landlords, like Grosvenor and Howard de Walden,” will take the view that if they strive to fill their sites with successful operators, then a turnover-based rental contract could be to their advantage.
And given the mutual economic benefit that such a model could produce, he explained, landlords would be better positioned to facilitate an area-based uplift and introduce local and innovative operators that contribute to “great environments.”
Edward compared this approach to that of some shopping centre landlords, which “haven’t been particularly well done” – for example, shopping centre giant Intu Properties announced last month that it was likely to appoint administrators.
“They haven’t been great sites or particularly exciting places, but they’ve maybe been the only game in town,” he said.
“I think this will make landlords think more about the partnership and more about creating great environments for everybody to trade, which will bring in more customers and which will then make their properties more valuable.”
“The guys who are long-term and have been around a long time, that’s how they think.”
For many businesses across the sector, rent liabilities remain the number one outstanding issue inhibiting their ability to reopen and recover.
Speaking to MCA last month, UK Hospitality CEO Kate Nicholls said that whilst there has been no change in the Government’s offer of rent support – measures include an extended debt enforcement moratorium and advisory ‘code of conduct’ – that ministers were in “listening mode”, and won’t leave businesses unprotected.
“The conversation is still alive,” she said. “We are just talking through a range of ways in which the sector could be supported. The Government hasn’t closed the door on rent and it still remains on their agenda, which is the most important thing.
“Until we get either a market-led resolution, or, as I think it will have to be, a government-incentivized resolution, it’s going to be a big drag on our ability to recover quickly.”
Pizza Pilgrims non-exec Ian Edward: “Grown-up landlords” will prioritise partnerships
If landlords want to see their sites recover from the coronavirus crisis, they must prioritise making long-term partnerships over hard-lined rent demands, MCA’s The Conversation has heard. Speaking at the event, Pizza Pilgrims non-executive director Ian Edward said that given how the crisis has revealed the unworkable nature of the current commercial rent model, it will hopefully prompt the “better, long-term landlords” to change their approach going forward.