With the upheaval of 2020 and consequent devastating effect on the retail sector, you could be forgiven for thinking that if bricks and mortar retail wasn’t already dead, it was on its knees.
The truth is somewhat different.
It is true that online shopping has continued its steady growth in Australia, which may have sped up slightly in 2020 during the COVID lockdown/s. However it is important to look at what people are buying online to get a true sense of which types of retail outlets are affected and which ones are not.
Discretionary spending has certainly increased in the online space – think books, gifts, clothing, electrical accessories. But much essential spending has continued, if not increased in bricks and mortar businesses in 2020 – takeaway food outlets, supermarkets and cafes as well as medical services (doctors, dentists, pharmacies) have mostly continued to be busy, if not busier than before.
Some of this can be explained by the WFH* phenomenon – with so many people now doing their jobs from their homes in the suburbs rather than going in to the office in the CBD every day, much of this daily spend is now happening in local shopping centres instead of in the city. Which is of course great for suburban shopping precincts!
What does all this mean for retail (and commercial) property owners in 2021 and beyond? Our advice is…
- First and foremost, remember – as with all businesses in the 21st Century – the realm in which a retail centre operates is dynamic
- Never lose focus of the fact that you as a landlord are in the rent business long-term, not short-term
- Ensure you are managing rent arrears directly and proactively
- Plan and budget to keep the retail centre fresh and relevant to the local population
- Make sure you address lease expiries early with tenants
- Always be assessing new technology to improve operations, security and maintenance
- Where possible have net leases with outgoings payable (as no-one knows what unexpected costs are coming and this makes the property more attractive to a potential buyer
*Work From Home
Retailers strike shorter leases as uncertainty lingers (Australian Financial Review)
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