After many months of hibernation, weeks of hard work, preparation and anticipation, April 12th arrived, albeit rather full of snow in some parts of England. Enthusiastic shoppers, relieved at the easing of lockdown and the hope of a taste of normality, came out in their droves to the high street. Stores such as Primark opening their doors early were met with long winding queues of eager shoppers, stood determinedly on floor markings designed for social distancing. Other stores carefully managed the situation with pre-booking systems.
So how was the experience of visiting a shopping centre, retail park or high street for the first real non-essential shopping of 2021? Well it was great to see people out and about, smiling, chatting and enjoying themselves. I spent the morning in various retail locations and there was a real buzz about these places that was good to see. There was minimal evidence of anyone being nervous or afraid. In fact, it was slightly worrying how little social distancing took place inside the shopping centres and in some of the outside queues. Of even greater concern were the numbers of people not wearing masks inside, especially amongst our younger age group (20-25) shoppers.
the first challenges that we’ll see over the coming months will be around people management. This is going to be especially the case on a weekend when it’s likely that shopping centres will be significantly busier.
So the first challenges that we’ll see over the coming months will be around people management. This is going to be especially the case on a weekend when it’s likely that shopping centres will be significantly busier. Monday saw footfall return to better than, or near to normal daily number pre-Covid which is great. Whilst we expect that this will decrease as the initial novelty of being allowed to shop again wears off, the weekends are almost certain to prove to be busy for retailers and site staff. Patience and consistency will be key qualities when dealing with the general public.
Challenges in the medium term
Challenges in the medium term relate to the confusion (or at least some grey areas) around the rules for outside dining and drinking. People are eager to be out and socialising again as evidenced by the ubiquitous pictures of people enjoying pints filling up social media timelines on Monday. And understandably pubs, cafes and restaurants want to take advantage of this opportunity to earn some much needed revenue. Property owners will do what they can to assist their tenants with adhering to guidelines but it is ultimately the responsibility of the operators whether they follow these guidelines.
Whose responsibility is it to maintain social distancing and the wearing of masks?
The government cannot anticipate every situation and it seems that a number of operators are pushing the boundaries as far as they can when it comes to interpreting the rules. This is both understandable and worrying. As a property management team we have to consider what our role is when we see the boundaries being pushed. Is it our place to intervene? I believe we must have difficult conversations and advise if we perceive rules are being broken but ultimately we cannot enforce these rules.
The longer term challenges are around the availability of funds to keep centres operating. Our experience, when it comes to service charge, is that tenants in most cases have been very understanding and incredibly good in paying their contribution, often at full rate for the 2020 budget levels. At the same time, our on-site teams have been great at reducing the 2020 costs down through many forms of saving with the expected average savings being 15-25% of the anticipated budget. The issues arise with the landlord contribution to the service charge. It has been widely written that many tenants have been unable to pay rent, which means that a number of owners have not received adequate funds to allow them to meet their obligations for the service charge, either for capped amounts or more frequently, void areas.
For the last 12 months this has not been a problem as the amounts received from tenants, together with the savings made, have allowed for this cash shortfall to be less of a concern. This however is not the case in 2021, where budgets have been adjusted downwards (average savings of 8-10%) and where money will need to be returned to the tenants that paid in 2020 as part of the service charge reconciliation process. This means that owners will be asked to make their full contributions for the last year and in a number of cases, whilst always willing, simply will not have the funds available to do so, as they have had to meet banking covenants to remain solvent.
in the short to medium term, funding will be very tight; centres and retail parks teams may have to run their assets even most cost-consciously than they used to.
So, what does this mean for the industry?
Well, it means that in the short to medium term, funding will be very tight; centres and retail parks teams may have to run their assets even most cost-consciously than they used to. I can see problems with this but also some positives. The challenges will be that trading hours may need to be curtailed, security and cleaning cut back further and any preventative (or even essential) maintenance put on hold. All at a time when retailers need to be operating at peak efficiency and welcoming customers back, especially if the threat of online migration is to be challenged. On the other hand it does force property management teams to be more robust and decisive in prioritising what really needs to be done rather than what is a ‘nice’ to do. Opportunities abound for better use of technology, robotics and more efficient ways of charging occupiers for the cost of the services that they actually use (or not charging for those that they don’t use). It’s really going to keep us on our toes.
"The camaraderie and collaboration amongst our tenants and site staff has been brilliant. It's been such a worrying time for people and their businesses and they really deserve acknowledgement for their efforts and determination to keep things running.”
Overall, though, credit must be given to the centre teams, the retailers and the customers for their resilience in exceptional times. Non-essential retail has now locked itself up and re-opened three times! And each time have ensured everything is working and running despite the funding issues and the unfortunate growing list of retailer casualties. As Nicola Williamson, our Broad Street Mall centre manager explained “The camaraderie and collaboration amongst our tenants and site staff has been brilliant. It's been such a worrying time for people and their businesses and they really deserve acknowledgement for their efforts and determination to keep things running.”
Things will definitely improve over the coming weeks and months. Changes will be made out of necessity, and the shopping environment will evolve over the coming years in ways that few can possibly predict at present. One thing is certain; we humans like to interact. We like to be around other people, to laugh and socialise. Monday 12th April was definitely one of those days that made many feel happy to be able to be around others and visit a shopping destination again. Long may that last.