retail assets in the Post-covid era

How ratings and values vary

Of the major legacies that the pandemic leaves to retail, a more constructive and necessary collaboration between landlord and tenant is certainly a benefit that stands out. The various forced closures, the exponential rise of e-commerce, the almost complete absence of international tourists and the consequent loss of profitability have prompted an inevitable confrontation between retailers and landlords. They were thus induced, more and more, to work in partnership and to study better concepts and solutions together. This collaboration has also been carried forward in the definition of rents: from step rents to annual discounts to cash contributions to help fit out the shop, but always keeping the standard rent intact. In some cases, a turnover rent has been introduced, based on a fixed rent plus a percentage of turnover, which in some cases can be reduced to a rent on sales alone. In general, it is also possible to adopt a flexible approach in terms of both duration and contractual rent, allowing retailers to use more flexible formulas such as pop-up stores and experiment with new formats increasingly based on experience and entertainment. Because while, inevitably, landlords are now much more careful in selecting tenants by assessing cash flow, effort rate and quality of business model, the most savvy tenants have realised that they must create a real reason for customers to return to the shop. The winning mix? Location, concept and experience. The value of a retail asset will increasingly depend on these elements.