How retail landlords can harness overseas demand

The UK remains an attractive destination for international retailers. But in an uncertain political climate, how can retail landlords harness this potential?

Brexit continues to fuel uncertainty among commercial property owners, with much about the UK’s future relationship with Europe still unknown.

But it’s not all doom and gloom. In fact, a new study offers a strong ray of light to retail landlords in particular…

Rising global demand

Britain is now the number-one destination for international retailers aiming to expand their store presence in Europe, the Middle East and Africa, according to commercial property consultancy CBRE [SC1].

With a range of global firms polled, the UK was named the most attractive market for expansion by 65% of respondents. France (43%), Germany (38%) and the UAE (24%) followed.

In another encouraging finding, around half (51%) of international retailers have plans to open up to five stores across Europe, the Middle East and Africa this year. This is occurring despite the rise of e-commerce, with 81% of retailers saying that online trends won’t impact their plans to open more physical stores in Europe.

Potential barriers remain

But while the research suggests 2017 could prove a healthy year for many retail landlords, it might not all be plain sailing.

Some 57% of the retailers polled said rising real estate costs could hold back their expansion plans, and 51% are concerned about a shortage of quality premises.

Highlighting the potential obstacles, Andrew Phipps from CBRE said:

“Finding quality retail space in the right location remains a challenge and this has been a consistent rental driver in some of the most prime retail areas.”

He added: “There is little expectation from retailers that this lack of quality space in key western markets is likely to decrease in 2017.”

Maximising opportunities

CBRE’s study may offer encouragement to retail landlords as the UK enters two years of potentially complex Brexit negotiations. But converting interest from international brands into formal tenancy agreements may prove easier said than done.

Rather than sitting back and waiting for tenants to come to them, commercial property owners must be proactive. The following actions could all make premises more attractive to retail businesses:

  • Maintain and repair your portfolio. Keeping decor, furnishings and locks in a good condition will give you the best possible chance of attracting new tenants. Shop exteriors should only be eye-catching for the right reasons.
  • Think green. Installing energy efficiency measures such as insulation and low-carbon heating systems should appeal to retailers looking to keep costs down.
  • Keep rents competitive. Rental costs must be realistic to avoid pricing tenants out, so do your homework. Particular care should be taken if there are plenty of other available properties nearby.
  • Advertise effectively. Ensure the retail space is presented as attractively as possible, with crisp photos and engaging language used in any promotional materials.
  • Promote local facilities and transport links. Tenants are more likely to sign a contract if they can see car parks, complementary shops and public transport amenities nearby.

Staying in the black

Keeping tenants happy can help you avoid the problems associated with empty premises and costly void periods. But other steps can also ensure retail landlords stay in the black – including sourcing the right insurance.

With trusted policies behind them, commercial property owners can safeguard their assets and revenues, while covering their liabilities.

Insurance Requirements

At NIG we have a range of products which can cater for the needs of Commercial Property Owners, small or large.

For smaller risks we offer Property Owners. Designed for commercial properties that are owned or managed by the policyholder, it is suitable for single and multi-location portfolios of up to 25 premises. On top of that it is available via our highly rated online trading platform, TheHub.

For larger risks we offer Essential Property Owners which is traded via our regional offices. This product is designed for professional property owners or managing agents whether it be a large single site risk or larger commercial UK portfolios.