Priceless Rent Prizes in Poole – Rent-free Recovery Plan prescribed for 10 lucky businesses in Poole
June 27, 2021
3 min read
What's going on here?
UK landlord Legal & General Investment Management has ceased demanding rental payments for 10 fortunate businesses in Poole for two years, to aid both the recovery and growth of these businesses on the post-pandemic High Street.
What does this mean?
Throughout the COVID-19 pandemic and the lockdowns implemented during this time, the UK High Street has been severely impacted. As reported by PwC, in 2021 there was a “record net decline (-9,877), number of closures (17,532), and a new low in the number of store openings (7,655),” with the prognosis that the circumstances are “likely to get worse before [they] get better.”
Recognising the need to adapt to the current climate, Legal & General Investment Management’s choice to cease demanding rental payments for two years is a smart move. As in-person shopping returns, this provides both a safety net and level of certainty for those businesses whose future depends on the High Street. Equally, it also suggests a level of security for Legal & General Investment Management. By providing a supportive rental environment for its clients who are increasingly competing with online shopping, landlords will also benefit from securing long-term rental prospects. After these two years have expired, these businesses are more likely to have the resources to sustain their incomes without worrying about rent during this time. Thus, it appears to be a win-win scenario.
What's the big picture effect?
Notably, not all landlords will be in the same position as Legal & General Investment Management. The harsh reality is that not all landlords can, or will be willing to, provide such support to the UK High Street. Such willingness to provide similar measures largely resides in the fact that online sales have been booming, whilst the High Streets have been suffering. For example, as reported by Ofcom in June 2021, “UK online shopping sales rose by 48% to nearly £113 billion in 2020.” This online presence could indicate a lack of certainty as to the future of the High Street and potentially slow improvements for in-person shopping environments.
On the other hand, Denizer Ibrahim who leads Legal & General Investment Management’s retail strategy stated that “for the first time in our generation we had the opportunity to press refresh with our environments.” How this refresh button operates depends not only upon the relationship between the public and UK High Street retailers but also between the landlords and tenants whose business prospects have fluctuated due to COVID-19 measures.
If more landlords voluntarily suspended rent payments for retail outlets, how beneficial would this be? Certainly, this would benefit the tenants more so than the landlords. However, is there actually a choice in the matter? Helen Dickinson, who is the current Chief Executive Officer of the British Retail Consortium states that “the unpaid rents accrued during the pandemic…are a £2.9bn ball and chain that hold back growth and investment and could result in a tsunami of closures.” This suggests that landlords have the option to either experience non-payment as a result of closure, or attempt to provide a level of relief which could potentially secure more sustainable prospects in the future as in-person shopping returns.
Ultimately, Legal & General Investment Management are in a fortunate position to be able to offer 10 businesses with two years of free rent in Poole. Whether more landlords will consider this approach to be a clever way of protecting current businesses on the UK High Streets or too risky to adopt, it remains that the future of the UK High Street as a whole remains largely uncertain.
Report written by Karolina Smolicz
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