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Colliers proposes new property leasing approach to target UK retail troubles

A “radical approach” to property leasing is being proposed to help shopping environments throughout the UK by property consultants Colliers International .

The five-point plan is aimed at helping retailers access viable trading space while enabling retailers, landlords and investors to find occupiers for the rising amount of empty shops across the UK.

The proposals are in response to what Colliers called “the havoc that has been wrought on the sector by major increases in business rates last year, further growth of internet sales and the growing number of retailers shedding stores through Company Voluntary Agreements (CVAs) this year”.

Colliers’ co-head of retail agency, Dan Simms, said: “We understand the inordinate pressures that retailers are currently facing as long-term structural changes to the retail market play out. But retailers, landlords and investors face equal challenges, and the way forward has to be an equitable approach which respects the situations of both.

“The property industry now needs to think about a radical reshaping of the lease model for much of our retail property.”

Colliers believe that the five point plan would better balance the interests of retailers, landlords and investors. They call for:

  •  Standard five-year leases granted outside of the 1954 Landlord & Tenant Act

  •  Rents based purely on the turnover achieved by the retailer in a particular shop

  • Mutual options to break the lease dependent on agreed turnover thresholds

     A ‘white box’ approach to shop specification where a basic fitted unit is made
  • available to the retailer to minimize their fit-out

  •  Limited incentives/ rent free

Simms added: “This isn’t just blue sky thinking. This model won’t be relevant to some circumstances, particularly in fragmented ownership high streets and for flagship stores but there are an increasing number of similar leases being agreed across the UK.

“We are close to launching a leasing campaign for a new mall redevelopment within a well-established shopping centre where all leases will be offered on this basis.”

The news comes after earlier this month the British Property Federation (BPF) said it believed that retailers have been “mis-using” the CVA process to lower the price of rent.

Following the recent upsurge in CVAs, the organisation called on the government to conduct an “urgent review”.

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