Two of Britain’s biggest shopping centre owners have sought to assure the markets over an improving picture in the hard-hit retail sector, but they revealed ongoing difficulties for retailers to meet rent demands.
British Land, which owns shopping centres including Meadowhall in Sheffield and office buildings in London, said it had collected 36% of rent from retailers in the June quarter.
Rival Hammerson – the group behind Birmingham’s Bullring and Brent Cross in north London – said it had collected just 16% of third quarter rent in the UK.
But they gave hope of a bounceback for retailers knocked by the coronavirus lockdown, with British Land confirming 64% (or 894) of stores across its sites in England are now open and have seen sales surge 91% over the first week of reopening.
The updates come less than a week after major shopping centre operator intu tumbled into administration after failed talks with its lenders.
Intu – which runs landmark centres such as Manchester’s Trafford Centre and Lakeside in Essex – had struggled under a £4.5 billion debt burden for the past year, and has been hammered by significantly lower rent payments from retail tenants since the coronavirus outbreak. Its centres continue to operate for the time-being.
In its update, Hammerson said it was “confident that collection rates will continue to improve materially in all regions as agreements are progressed with brands”.
It also announced it had been able to secure some breathing space from lenders and accessed the Government’s coronavirus support scheme to bolster its balance sheet.
The firm said 73% of UK rent had been collected for the first half of the year.
On quarterly rent day last week commercial property management platform Re-Leased said that overall landlords had collected just 13.8% of rents due on quarterly rent day compared to the 19.8% collected in March. However it did say it expected further collections to be made in the coming weeks.
British Land added that footfall and sales were encouraging for English retail tenants since the lockdown restrictions allowed non-essential shops to open from 15 June, providing further cause for optimism.
It said: “We expect the best-located open-air retail parks to perform an important role in retailers’ reopening strategies, and this was reflected in positive like-for-like sales for out-of-town stores open in England versus the same week last year.”
The group is negotiating rents with shops on a case-by-case basis, agreeing rental waivers of £3 million in relation to the June quarter in addition to £2 million for the March quarter.
“This is an ongoing process and so we expect the collection rates for June to improve over the coming weeks,” it added.
Yesterday it was revealed that, according to the latest figures from the BRC-ShopperTrak Footfall Monitor, retail footfall in week two of non-essential stores reopening – covering the week 21–27 June, 2020, increased by +7.7% on a week-on-week basis.
These figures also backed up British Land’s assertion that retail parks are outperforming the rest of the sector given the ability for retailers and shoppers to exercise social distancing.
The figures show that footfall on high streets declined by -58.1% year on year (YoY), compare to a decrease of -77.8% YoY for the month of May, while retail parks saw footfall decrease by -28.4% YoY, which was again not as drastic as the decrease of -55% YoY for the month of May.
For the same June period, shopping centre footfall declined by -60.7% YoY, that compared against a decrease of -84.9% YoY for the month of May.
This morning the Bank of England’s chief economist Andy Haldane suggested the UK economy could bounce back from the trauma of the COVID-19 crisis quicker than some fear suggesting evidence at this stage points to a so-called V-shaped recovery, meaning it will bounce out of the downturn as quickly as it slumped into it.
COVID-19 has led to the UK economy shrinking by 2.2% in the first three months of 2020 which was a worse decline than expected, nonetheless Haldane remained optimistic of the bounce-back. But he cautioned a wave of mass unemployment could knock the recovery off-course.
“There is a debate about which letter of the alphabet will best describe the path of the economy, with some scepticism about the V-shaped scenario path in the Bank’s May monetary policy report. It is early days, but my reading of the evidence is so far, so V,” he said.
Whatever shape the recovery comes in, it will be too late for many of fashion retail’s biggest names. The crisis has already ensured that many, such as TM Lewin, Oasis, Warehouse and Cath Kidston, will not be seen on British high streets again (though all will continue as online entities). Others seem likely to follow before retail’s bounce-back comes.