Across the Midlands during the past 12 months, tenants have been taking advantage of landlords looking to secure good covenants on long-term leases wherever possible.
In some cases, this has meant a reduction in prime passing rents of up to 50%. Due to recent pressure on landlords, this re-alignment of rents has been further driven by a lack of incentives available to tenants. In this region, while landlords are happy to give rent free periods, cash incentives are reserved for “game changing” lettings only. For example, Sainsbury’s recently secured a unit on prime Clumber Street in Nottingham at around half of the previously passing rent in exchange for a 15-year term with three months’ rent free.
City centres, for the most part, have continued to bounce back, aligning with a national trend of increased urban retail activity. Footfall and occupier interest in Nottingham, Birmingham, Derby and Coventry has increased where there is a larger shopping mission. While each of the big regional cities have their challenges, for example the closure of John Lewis in Birmingham, innovation and positive solutions are also being progressed such as large mixed-use residential, office, student and hotel schemes. New large-scale redevelopments of this type are becoming more prevalent with schemes such as MODA Birmingham on Broad Street continuing to drive city-centre evolution.
Demand from retailers remains strong in the best shopping centres in the region. Schemes such as Bullring Birmingham, Victoria Centre Nottingham and Touchwood Solihull have managed to mostly maintain occupation levels and rents through strong national and regional tenant demand.
In line with national trends, the food and beverage as well as drive-thru markets remain extremely strong. All of the national operators are bidding against each other for the right space whether it be leisure space in the city centre or a prominent arterial route development site/retail park. Recent entrants in the region include Giggling Squid, Albert’s Schloss and Lulu Wild. This market has been further enhanced in cities such as Nottingham with innovative new local and regional occupiers taking new space such as Pizzamisu and Mesa.
About the author
Tom Cullen is a director in our Retail Agency North where he works with occupiers looking to secure or dispose of locations in the Midlands area.
To contact Tom, email Tom.Cullen@colliers.com