During our recent Midsummer retail event I took the audience through the changes that have been happening in the retail landscape since 2019, and at the heart of it was the impact that increasing access to data has made.
We concluded that data is one of the metrics from which decisions are made, but it is expertise and experience which are the ultimately the defining factors.
Responsive turnover-linked rents are undoubtedly here to stay and are an important part of the retail landscape. Retail property owners are now being directly impacted the performance of their occupiers’ businesses, and this, by extension, impacts the value of the underlying asset. Owners need to know – on practically a day-to-day basis – how their occupiers are doing and that means harvesting their data.
This presents a challenge for owners with small ownerships or those who do not want an asset management intensive asset, and as a result, it is likely that a number of passive investors will exit parts of the sector, and their assets will be picked up by more entrepreneurial, asset management-intensive owners. This is a trend already being seen across the shopping centre and retail park sectors and the high street is following. However, major shopping centre owners and those with large holdings may well be set-up for this process, and for those who have the resource and expertise to take a more hands-on approach with assets, this is a time of exciting opportunity to take market leading approaches to leasing.
We have seen this first hand with two of our clients: Landsec and Grosvenor, who have really ripped up the rule book and are making radical changes to the traditional leasing model.
Creative leasing ideas
We are working closely with Landsec to implement their new brand-led and brand-first approach to leasing. Having assessed the challenges that other major owners have faced in years gone by with how they lease their centres. They have put a new team in place - together with a select panel of leading agents, who focus on nurturing and developing relationships with brands and having a greater involvement in helping them thrive in their physical retail spaces.
Another example of the fresh thinking that has emerged from the past two years is Grosvenor’s new short-form leasing structure. This is a much-simplified lease and is designed to tackle the obstacles faced in negotiating and documenting a lease. This new form of lease enables occupiers to access units in a number of days, rather than months. It was fascinating to work with Grosvenor on developing this lease form and it is already having a clear effect on the streamlining of the leasing process across their estates.
An important foundation underpinning these new strategies and innovations is data - both in its collection and application. The challenge we often now face is having simply too much data, which can cloud decision-making and cause deal paralysis.
The sources of data around retailing and shopping environments are constantly expanding: data from credit card spend, wi-fi tracking in a shopping centre, sales densities, catchment and demographic info, the weather and even the position of the sun.
With all of these nuances in mind, it is essential not to let the data “noise” get to where you literally cannot hear yourself think. Most importantly, the use and analysis of data must be paired up with experience and judgement to make clear and quick decisions.
Our sector thrives on change and momentum, and there is a risk that, despite there being extensive and exciting demand for retail space, bricks and mortar sites could be left behind because of slow and sometimes bureaucratic decision making. The world of online retail is agile and proactive: physical shopping spaces need to have the same qualities. This approach will help to keep driving assets forward to create and maintain vibrant shopping environments. Data should be used to assist in decision making, but not be the sole driver of it. As a sector we all need to trust our instinct on what the right move is.
Review your data, work to a logical decision and trust your judgement.
About the author
Jessica Short is an associate director in our Retail Agency team who specialises in shopping centres, high street and occupier representation across the UK. She works with multi-national landlords including Landsec, Aberdeen Standard and Hines, as well as several occupiers such as Vodafone, Santander and iSmash.
To contact Jessica, email Jessica.Short@colliers.com