Central London retail 2020 and beyond: A landlord’s view
London landlord Shaftesbury is right in the thick of it when it comes to dealing with the devastating effect that the coronavirus pandemic is having on retail, hospitality, entertainment and everything else London’s West End has to offer. With a portfolio of property covering some 15 acres, and taking in to account areas such as Carnaby, Soho, Seven Dials, Fitzrovia, The Yards and Chinatown, the lockdowns of this year – and now with London plunged in to Tier 4 restrictions – have meant forced closures and a dramatic nosedive in footfall, of which the company has never seen or had to deal with the fall-out from ever before. Shaftesbury’s Retail Director, Samantha Bain-Mollison, tells it how it is on the retail frontline, while also offering optimism as we head in to 2021
Did you foresee London being put into tighter Tier 4 restrictions pre-Christmas
There was always a risk but we had hoped that, given our occupiers had worked hard to reopen safely, they would have a chance to trade through the important Christmas period. This is a huge blow to London businesses. Many had adapted to tighter restrictions by going online or offering click and collect or takeaways, and we can only encourage customers to continue to support the businesses they love in the area by still purchasing from them online or through other ways if they can.
Will it have a devastating effect on stores across Shaftesbury's Central London retail portfolio?
We love to see our businesses thriving in all our destinations with local, national visitors and international tourists enjoying all that our shops and restaurants have to offer. Many businesses will have hoped to be open for trade at such an important time of the year, but obviously abiding by the government rules is a necessary measure. We hope the government continues to support businesses financially by putting clear policies in place which will allow companies to plan long term, for example being clear about their plan next year for business rates, as currently there is a business rates holiday which is due to end in April 2021.
How do you now see January being in London and what is Shaftesbury's message of hope to your tenants?
Most of our occupiers have already shown their adaptability to overcome many obstacles this year. We will continue to support our businesses and, while we share their disappointment of closure in Tier 4, we look forward to coming to the end of this difficult period and then welcoming visitors back into the West End. We are committed to helping the West End return to prosperity in 2021.
As released last week, Shaftesbury plummeted to a £699m annual loss after the pandemic battered rental income and caused property values to plunge this year, what’s your take on that?
We have been trying to support our tenants as much as possible through the enforced closures. We’ve agreed a number of arrangements with tenants where they are paying concessionary rent. We do have a number of independents that need more support than that, and we have given them that support. So, obviously our rental income has been significantly hit. We want to ensure that when the vaccine has been properly rolled out in 2021, and footfall has returned, that our retailers have the ability to start trading successfully again. Our position is always to look long-term, and our investors are fully supportive of that as well.
How was December looking before London was put in to Tier 3?
The streets of London were very busy in comparison to a few months ago, and we were optimistic about improved sales and footfall in the lead up to Christmas. The forced closures will have hit the restaurants particularly hard as they worked so hard to reopen again and trade safely under the new restrictions and, of course, they have perishable goods. Now having had to close again under Tier 4, it’s really sad for them.
How have retailers been dealing with the forced closures?
Our operators have been doing the best they can within the restrictions imposed on them. Many have adapted by advertising themselves differently, focusing on making sure their services and products are sold online in a meaningful way, and improving their click & collect or delivery services.
Has there been many retail casualties so far?
Sadly, there have been a few. We have been relatively lucky as Shaftesbury hasn’t been subjected to many CVAs. Many of our tenants are small companies who haven’t had to use the process. We did have one with Clarks Originals on Berwick Street (a diffusion brand of Clarks) but they have chosen to keep their store on Berwick Street open.
Ben Sherman was one that we were sad to see go during the first lockdown, but they had been struggling with their brand identity for a long time. Joy Everley jewellers is another shop that sadly closed. Joy ran the store on Newburgh Street for 21 years – we hoped that she would stay but she found the uncertainty of lockdown too much. In Seven Dials, London perfumer Miller Harris went in to administration, but the previous management team have now taken control and the business has reopened on Monmouth Street.
Will the retail landscape look dramatically different?
We have had some amazing meetings in the past few weeks with exciting international and national retailers (of course via Zoom calls). With news of the vaccine, a number of retailers are now looking ahead to the future and want to open sites in Central London in 2021. Retailers who want to be in Carnaby, Seven Dials or Soho still want to open the best possible sites sitting alongside like-minded operators. The brands we are talking to are innovating and reacting to these challenging times by creating even more exciting stories and products to sell, while also looking for unique shop fits to reflect their approach. Sustainability is also very much on the agenda and, as a result, I think we’ll see brands being more experimental and unique with their products and instore experiences. Online and instore, customers choose to shop with brands who are operating in a sustainable and ethical manner, being transparent with their processes and communicating it to their consumer in an interesting way. I have no doubt the main focus of many retailers for the future is to trade successfully, but also improve the world they trade in as they do it.
Are there perhaps more enticing deals to be had and greater opportunities now for potential new tenants?
There are always new opportunities. Shaftesbury has always talked to retailers and asked them what they need. We have always been quite flexible in our approach to businesses, and that will not change. I think the sector in re-sale and hiring clothing and accessories, as well as vintage clothing and ethically focused brands, are the ones that customers are now talking about and looking for, and we would like to have more of those types of retail in our streets. Unsurprisingly, retailers are currently thinking very short term about property and Shaftesbury has always been supportive of brands trialling locations, taking short leases in very quick timeframes and providing marketing support for the period they are open. We also have a number of start up businesses opening stores who we would love to convert into long term relationships. An example is Friday on My Mind, a fashion and accessories brand who have opened on Beak Street this year. It is their first store and they have done a brilliant job getting open quickly - prior to lockdown. A good result would be to see them trade successfully, and take a second site in another one of our villages.
Despite all that’s happened, you’ve still had new openings this year – which ones have been of particular note?
The Rolling Stones opened their flagship "RS No.9" on Carnaby Street – a world exclusive which opened in September. It’s an amazing store and it was a global story, right in the middle of the pandemic. Adidas Originals also relocated into a much larger store on Foubert’s Place. They moved from a 2,500 sq ft unit into a 7,500sq ft unit, which is now their global flagship. They have invested in an amazing fit-out with a massive lean towards sustainability, incorporating recycled materials into all their latest product range. Urban Outfitters’ own brand iets frans also opened at 44 Carnaby Street. It’s youth culture fashion, leisurewear and in really bright colours – bang on trend. Skin Laundry beauty shop also opened their first UK standalone at 9 Newburgh Street, selling product and offering treatments. Wax London is another new one on Newburgh Street. They have opened up a pop-up store which is under offer to a restaurant, but they are a great fit for the area and we would love to find them another location.
What’s been the very latest new addition?
We very recently had the opening of the new Cole Buxton store on Marshall Street, a brand which very much fits in with the likes of END and Axel Arigato on Broadwick Street. It’s a relatively new UK brand offering premium British sportswear and leisurewear. Traditional Soho tailor Mark Powell is also relocating from Marshall Street to Newburgh Street in January, which will be a new chapter for one of our oldest tenants. He wanted to go back in to a more traditional type of store which Newburgh Street offers, with its rich history and cobbled street.
How did the "Start Up in Seven Dials" competition come about?
Having some empty units in key areas, we wanted to offer young up-and-coming businesses the opportunity to trial their own retail space for the first time – promoting new talent with a point of difference. We have not revealed the winner as yet, but they will get our full rent-free support and shop fit-out along with our marketing team promoting the launch, and we are also going to be offering short-term rent-free opportunities to the three runners-up in the New Year, probably in early spring now.
Have you been approached by retailers requesting turnover-based rents?
Yes, we have, but then we’ve always been open to talking to retailers about different terms, depending on what a retailer wants to do and how they want to operate in our villages. Our curation strategy is very much about making sure we have the right mix of tenants. What the use of turnover rents have shown is that collecting the right data can help to inform our letting strategy, from which we will continue to make better decisions about our tenant mix and what to do with our buildings, as well as tapping into consumer demand - alongside marketing our destinations better to our consumers. The more efficiently we can collect and analyse data to draw meaningful conclusions about retail in the future, the better.
What changes have you made to promote your retail portfolio in 2021
One of the changes we have recently made is employing three retail agencies - Hanover Green, Cushman & Wakefield, and Nash Bond - to represent Shaftesbury across our whole retail portfolio of 300 shops (450,000 sq ft) across Carnaby, Soho, Seven Dials, Fitzrovia and Covent Garden. This new approach of marketing the whole estate, as opposed to separate villages, should make it is easier to communicate our leasing strategy to incoming and acquisitive retailers about our tenant mix requirements, and it will also streamline the process of identifying where a brand is best placed to fit in the portfolio. We are excited about this new arrangement as all three agencies have worked with us for a long time as trusted advisors, and we believe they have the breadth of knowledge and experience to help us through the expected recovery of the retail market in 2021. They also know we want to be creative in responding to the challenges in retail next year, and we are very open to new discussions.
Are there reasons to be cheerful?
Honestly, in the last three weeks, we’ve had so many exciting meetings, though sadly not in person. We would love to be back in the office hosting meetings again for real. Only last week I had a meeting with a retailer who has huge wholesale distribution globally and would like to open their first ever store on Carnaby Street, in spring 2021. Hopefully we can find them the right site. Then we spoke to a Scandinavian brand looking to open an exciting new store concept in Soho early next year. It’s really sad that London is currently in Tier 4, and if it’s a continued lockdown in the new year then January, February and March will still feel quite bleak. But, with the vaccine now being distributed, I think that by spring next year, with the sun coming back out, retailers and restaurants will be looking to the future and hopefully we’ll be able to keep making sure our areas are as special as ever. I am feeling positive about it - most days anyway!