2014 kicks off with the news that Land Securities, Britain’s largest property company, is reportedly negotiating with the owner of the O2 Arena to open a budget luxury centre similar to Oxford’s Bicester Village. The idea is that the centre would offer a chain of designer stores selling luxury goods at heavily discounted prices, thereby drawing in large crowds.
This leads us to speculate as to some of the likely trends to expect in 2014 and in particular, the impact on commercial property:
Online shopping – this offers the convenience and comfort of shopping at home or on the move. The net result will inevitably be fewer retail outlets for certain types of goods. However, physical stock must still be stored somewhere, and landlords who are able to offer warehousing and storage facilities could potentially cash in.
Shopping centres – it is an established principle that consumers like the experience offered by major shopping centres, particularly those with the additional lure of top quality restaurants and/or entertainment. Retail space in Westfield and the Bullring is likely to remain at a premium. The O2 Arena looks set to follow in the footsteps of the ever-popular Bicester Village. Shopping centres are certainly the place to be, but tenants should expect to pay considerably for the privilege.
High streets – with the dominance of shopping centres and online platforms, 2014 is likely to be another difficult year for high street retailers on the whole (with the usual exceptions). For those looking for an escape route, they may wish to review their leases for break clauses or conditions for assigning and subletting. For others, this year could be the perfect time to re-gear an existing lease to make it more attractive (typically by a reduction in rent!)
Do you envisage any new trends or strategies in 2014? As ever, we would welcome your thoughts.
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