CEO Chris Geaves Responds to The Times Article 'Don't Invest in Shops' – By Chris Geaves01st June 2021
For someone in Andrew Jones’ position he should know better than make sweeping statements and painting retail with such a broad brush.
The Times article ‘Don’t invest in shops – demolish them’ is something someone who diverted their focus away from retail is bound to say in order to promote his warehouse strategy. Why wouldn’t you? However, as retail experts will know well, retail is unlike a lot of other property asset classes. It has particular and complex characteristics and is very location and asset specific. Each retail location, unlike ‘sheds’, has their own very particular dynamics in terms of catchment make-up, competition, demand etc.
Yes, the UK has too much retail and the industry is going through massive change in how retailers operate and yes a lot of retail was over-developed without proper thought and expertise, often with poor planning decisions, but the fact of the matter is physical retail is here to stay. The UK is a nation of shoppers. There is a thirst to shop and be entertained. What retail and particularly shopping centre owners need to do is be dynamic and flexible, recognise the needs of the shopper and work with the retailers to create attractive destinations. There is a lot of demand out there for new space but for specific locations and that is the trick – knowing where the retailers really want to be.
The article talks about repurposing being a last resort – it most certainly is not! I agree that it might work for those locations which I have commented on before that shouldn’t exist because they are simply over-developed with no real purpose and there is therefore an argument for wholesale change of use. However, introducing new uses (I don’t like the term repurposing) is a natural extension to making shopping more interesting, extending dwell times and creating a more extensive and varied offer.
Retail is changing and adapting with some exciting new concepts emerging. Doom-mongers may say “what about the internet? Online is growing.” Online is here to stay for sure. It might even get to a 30% market share. Retail landlords therefore need to work with online operators to enhance their offer and that’s certainly happening. The balance still leaves 70% in bricks and mortar. If the Lockdown had shown us one thing in retail, it’s online fatigue. Shoppers have been busting to get back to the shops and that’s evidenced in the return we have seen over the last few weeks.
With investment yields for ‘sheds’ plunging ever lower and buyer forecast returns looking thin, savvy investors will be back looking for yield. Good dominant retail will come back strongly not just for this reason but because retailers in the dominant locations want more space and consequently do well. Give it a year or so and who knows London Metric might even be back buying retail again!