Covid is demonstrating that high street newsagencies have significant benefits over shopping centre newsagencies in a pandemic. It is also helping high street newsagents be flexible in their approach to business, something that is more channeling in a shopping centre setting.
I suspect there are newsagents in shopping centres today looking for nearby high street location opportunities.
I suspect, too, there will be some who were considering a shopping centre tenancy who now consider it unlikely.
With shopping centre occupancy costs yet to reflect new market conditions, they are not appealing, especially when you consider the restrictions coded in leases as to floorspace allocation for categories outside what a landlord considers to be cor newsagency categories.
If shopping centre landlords do reset occupancy cost to reflect the new conditions, which would mean an occupancy cost decline of at least 33%, their space could be appealing for a newsagency or a newsagency related business.
It would be a bold landlord who makes that move. They are not known for wanting to be first for such changes.
The thing is, a newsagency is good for a centre, especially an evolved newsagency that is focussed on the future with a nod to the past. Such a business can be fresh, enticing and net traffic generating, not relying o=n the traffic a centre itself has.
With fashion retail looking at a tough year ahead and some other niches also challenged. the mix in shopping centres will change. That could be an ideal time for landlords to better support a traffic anchor like a newsagency. It will be interesting to see if they have what it takes to make their space commercially interesting to newsagents … because right now it is not commercially interesting.
One thing Covid has provided newsagents is options, meaning we are not as reliant on shopping centres as we used to be.
This would be a better outcome however the ocupancy costs are one thing and re location to a smaller floor area are another.
This is often the case where downsizing is effected apart from the refit factor of spending extra Capex it often means the Landlord of yesteryear doesn’t actually decrease the real rent per sq. metre if fact quite the reverse they increase the sq metre rate as it is less space.
This in turn defeats the purpose of return per square metre of Sales and Gross Profit.
Real retail efficiency comes into to play here.
Landlords do see Lotto as a main traffic draw especially within an evolved newsageny.
Well here we are some 15 mths after the initial Covid outbreak which has resulted in significant declines in shopping centre foot traffic and retail sales. Here we are with our country’s 2 major capital cities in lockdown. Unfortunately I am seeing that our major mall owners are still refusing to write down their own assets and market rents remain largely the same. Rent deferall repayments are causing significant pain with lease extensions set to simply delay that pain. I agree a write down of 33 per cent minimum is required for a sustainable future.
Steve it is a messy situation not helped at all by a lack of national leadership on this. The strategy of chasing of book value growth by landlords have come home to roost.
More immediately, I spoke to two retailers in major centres yesterday who had opted for No rent deferral and the landlord had automatically deferred. The tenants failed to pick this up. They now have a significant mess to clean up.
Landlord systems have not been adjusted to reasonably handle the Covid accounting requirements.