RETAIL ROCKS 2019 - ROUND UP
Posted by Ellandi on 4th Jul 2019
Last Thursday, Ellandi hosted its 8th Annual Retail
Property Conference #RetailRocks19. It is a well proven format, and a unique
gathering of senior friends in listed businesses, private equity, developers,
operating partners, occupiers, agents, architects, banks and significantly,
this year, local authorities. The
event aims to discuss key current topics in retail property and to encourage a
positive discourse around the sector (positivity being in short supply at the
moment).
Thank you to all those that took the time to attend
what turned out to be an insightful afternoon, those that were unable to join,
here's a short summary:
The (Dis) United States (of the
Markets)
We kicked off with Isabelle Hease, Head of Research
and Analytics talking to the room on State of the Market. Setting the
scene for the first of our panel discussions she lead us through some key
insights into the retail investment landscape. Shopping centre
transactions reaching £577M and for 14 of those traded, it was the
repurposing opportunities that were the most sought after assets. Transactions under £100m, it has been Local Authorities who
have been responsible for a sizeable chunk of all Shopping centre investments
so far this year. The lending market across
all asset classes remains reasonably buoyant, with levels of financing issued
remaining relatively similar for the last 5 years.
Looking to the
equity market, while Retail property companies are offering relatively
attractive dividends, the market sentiment is that this isn’t particularly
sustainable given – falling rents, cap ex needs and increasing leverage. Shareholders are,
understandably, much more pessimistic than fund managers, and no one really
believes their NAV’s resulting in retail property companies currently trading
at huge discount. In the background, bank lending pressure is increasing with
borrower default more prevalent, and liquidity measures such as cash sweeps
being employed. With 78% of all outstanding debt in the market due for
repayment in the next 5 years, deMontford stats shows that lenders have reduced
their exposure to retail assets by 13% over the course of the last
decade.
Talking about
the occupier market Isabelle confirmed that there continues to be some positive
headlines in certain sectors of this market with companies showing pre tax profits and opening of additional stores.
Concluding that, yes, people are spending their money differently – there is a
clear switch from discretionary goods and “stuff”, to essential goods and
services but UK consumer has held up pretty well – albeit they are now more
selective. So for retail to perform occupiers need to re imagine
how they operate and the products they offer.
Download the slide deck here
Death to my Hometown (how bad
really is it?)
A star studded panel discussion was next on the agenda
which included including experts on investment talking through some of the key
topics from Izzy’s presentation:-
-
The
need for sharing data and how important it is for investors, retailers,
analysts to use this to inform decisions going forward
- Positive
markets such as factory outlets and retail parks have been had a
relatively steady performance and the increased creativity with third
party management with local authorities to find further opportunities
within the market
- Looking
at repurposing and regeneration of shopping centres and their towns:
Residential is not always the ‘silver bullet’ and we are seeing a plethora
of alternative use opportunities from offices, cinemas to laboratories,
film studios and other creative hubs.
-
Aviva
Investors’ Barry Fowler talked through the challenges facing institutional
clients trying to create an alternative products from existing assets and
how much debt is available from lenders given the wider economy. Good
relationships and clear business plans including transparent data from
retailers opens doors to lenders according to Savills.
-
Change
in dynamics between retailers and landlords to include greater visibility
of data for valuations
Laura Hurley, MCHLG was next on stage after a short
break and spoke about how the UK Government is helping the High Street with
their £675 Future High Streets Fund. The government is taking this
seriously, changing policies but will need the private sector to get
behind this.
Download her slide deck here
Lucky Town (but will anyone be
paying any rent?)
Our second impressive panel discussion got underway
and discussed a broad range of topics with points of interest being:
-
Alteris’
Bert Broadhead talking about buying into the retail arena: the way retail
is owned, operated and valued is ‘broken’ and this is where things start
to get exciting
- Judith
Evans confirmed that when the word ‘community’ is referenced in articles
about shopping and town centres in Financial Times it generates a huge
increase in number of readers. Therefore homing into what the
community is engaging with, tapping into not demographic segmentation but
interest segmentation when looking at retail potential.
- The
need to explore how other retail arenas in Hotel, Airport and Exhibition
industries are successful at the moment; getting into the life of a
consumer – what role does a shopping centre play in their wider life?
- What
impact will shorter leases and extra costs involved in experiences in
shopping centres play in investment in the future and what kind of income
sources will there be?
- Getting
your consumer engaged in a digital and social manner will improve
productivity
Download video of the conference here
CONCLUSION
We are delighted that once again Retail Rocks 2019
attracted a great audience with leading industry players participating on
panels and voicing their views in lively discussions from the floor. People
were honest in their views, there was acceptance of the challenges currently
faced by retail but also a resolve to work collaboratively and creatively to
try and find solutions.
Here’s just some of the feedback:
“Thank
you very much for the invitation. I took a lot from the discussions and
presentations. A great event.” Sheffield City Council
“Thanks
all for a really good event. The line-up of speakers and panelists was
excellent” Coverdale Barclay
“Thank you so much for inviting me to what was yet
another fabulously successful RR!! Really useful stuff which I thoroughly
enjoyed.!” Workmann LLP
“Many thanks for sending through the slides from the presentation last
week. I found the whole afternoon very helpful and thought provoking.”
DRC Capital
“I really enjoy the
Retail Rocks events, always insightful and thought provoking. Very good panels
as usual and with the retail sands shifting so rapidly, it is good to hear
other people’s takes on it.” Roche Chartered Surveyors