Footfall and vacancy rates

I was interested to read a recent report from the British Retail Consortium (BRC) at:

http://www.brc.org.uk/brc_news_detail.asp?id=2393&iCat=681&iSubCat=2

The report states that footfall in January was 4.6% lower than a year ago. However, the vacancy rate fell to 10.9% in January down from 11.3% in October 2012. Both figures make for grim reading. Falling footfall and disappointing vacancy figures. Both pose problems for commercial Landlords who need healthy profit making (and rent paying) Tenants in their properties. As stated previously, many high street and shopping centre Leases are due to expire by 2015. It is vital, more than ever, that Landlords keep Tenants in their properties. This could present a good opportunity for the sharp Tenant.

How?

• The above is a strong argument in favour of monthly rents. Many retailers struggle with quarterly rent payments. Monthly payments would help Tenant businesses balance their cash flows better. Many institutional Landlords have made the switch to monthly payments. Moreover, monthly rents would avoid a Goldacre problem (the Landlord having to wait three months for their rent after the Tenant has gone into administration) because the Landlord would only have to wait a month for their rent.
• The Tenant is in a strong position to argue for liberal user, alterations and alienation clauses. The Landlord, as an investor, will naturally be concerned to protect the value of their investment. However, they must decide whether or not they want a Tenant more.

HMV, Jessops, Republic- it's becoming a worrying trend for the high street. The current spate of administrations is understandably leading to many sleepless nights for Landlords. Who knows whether or not it is your Tenant who is going to go bust next? It is in the interests of Landlords to keep Tenants (satisfied) in their properties. Smart Tenants will realise that this presents an opportunity.

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