A radical approach to property leasing is being proposed to help shopping environments throughout the UK.

The proposals come from leading property consultancy, Colliers International and are a response to 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 Compulsory Voluntary Agreements (CVAs) this year.

“The five-point plan is aimed at helping retailers access viable trading space, while at the same time enabling retailers, landlords and investors to find occupiers for the rising amount of empty shops across our towns and cities,”

said Emel Ahmet, Associate Director, Retail Agency, Colliers International in Birmingham.

“As with other UK regions, the West Midlands has been hit hard by the recent spate of CVAs and retailers going into administration. Carpetright, which has seven stores across the region amounting to xx,xxxx sq ft of space in non-prime locations. Whilst House of Fraser stores in Telford, Shrewsbury and Wolverhampton also face closure.”

Released to coincide with the launch of the consultancy’s annual Midsummer Retail Report, the proposals have been designed to better balance the interest of retailers, landlords and investors.

The five-point plan is laid out as follows:

• 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 minimise their fit-out
• Limited incentives/rent free periods

Colliers’ Retail Agency Director, Dann Simms, explains:

“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.

“These types of lease features are relatively common in the retail factory outlet environment but have not been brought in a structured way to the mainstream market. They create genuine alignment between landlord and occupier, and offer both the opportunity to flex rents and occupation of space.”

Ahmet adds:

“Despite difficult market conditions, Midlands retail locations have fared relatively well over the past 12 months. By rising 0.4% on average, prime rents across the West Midlands have seen their third consecutive year.

“The impact of CVAs cannot be ignored however, and what the property industry now needs to think about a radical reshaping of the lease model to allow retailers who are confident in their strategies to take advantage of the opportunities for growth across the region. Our proposed five-point plan presents a workable solution to a nationwide issue.”

Simms concludes:

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