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Landlords on the High Street
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michael


Posts: 3,210
Joined: Mar 2005
Post: #1
11-09-2012 11:55 AM

In the last couple of weeks I've had three separate conversations with people wanted to set up quality businesses in Forest Hill. In each case they found it very difficult to contact landlords and then what the potential tenants regarded as unreasonable demands from them; 1 year's payment in advance, maintaining the roof of the property, contracts lasting for 2 years or more, or just exceptionally high rents (higher than Lordship Lane was one comparison made).

As a result businesses are looking elsewhere or simply not being set up in the first place. We still have a number of empty units up Dartmouth Road and on Perry Vale, all of which are a waste of useful retail space.

What can be done to encourage landlords to bring businesses into their empty shops? And why is it so easy for new hairdressers to get established while it is so much harder for any other businesses.

In fairness there are a number of new businesses opened and opening that have managed to find a suitable site for their businesses, but despite the number of empty shops it appears that demand is greater than supply!

Does anybody have experience from other areas what can be done to address this issue?

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AMFM


Posts: 306
Joined: Oct 2007
Post: #2
11-09-2012 02:12 PM

Rent aside (and it seems ridiculous if the rent psf being demanded is higher than East Dulwich), it is not that unusual to have a lease for more than 2 years in respect of commercial premises - in fact, I'd say the norm is 5 or 10 years with a tenant's break option.

Equally, I suspect the "year's rent up front" is a rent deposit, which again, is pretty standard fare, particularly if we're talking about a start up with little or no accounting history.

Landlords want to let their premises but they also want, and need, their rent to be paid. They also want continuity and would rather not have the hassle of having to enter into renewal negotiations every 2 years (if it's a 2 year lease) if they can let it to a good tenant on a 5 or 10 year lease.

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sydenhamcentral


Posts: 269
Joined: Mar 2008
Post: #3
11-09-2012 04:19 PM

Hi Michael,

it's the same story in other areas. We have worked with a few different meanwhile space type companies. They basically say the following;

• Agents are a waste of time, it only seems to work if you speak directly to the landlord.

• It helps to have an incentive such as a rate rebate because you are a charity. Some meanwhile space companies are CIC's but they have a separate company that is a charity or the scheme is set up as a charity.

• All the big schemes (that I know of) for meanwhile space (as in 10 shops) have been 'luck out's' where they have all be in under one landlord. that's who it worked at Brixton Market and Willesden Green.

The big incentives for landlords are if they are local and really love the area, but these are hard to find. But if a meanwhile space can lead to a viable business that will turn into along term client, then that will be a big incentive. as part of the Portas Scheme, this should help as shops will get expert advice which should help them become long term viable businesses rather than the high quick turnover of copycat businesses that infect out high streets.

At the end of the day it's better to have someone in your shop paying rent than no-one. As shown by Dartmouth Road, once good, creative, exciting, different businesses start to move to an area, other follow and it organically starts to regenerate. Smart landlords know that.

Hopefully Forest Hill has smart landlords with guts and vision and not greedy ones with narrow minds.

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michael


Posts: 3,210
Joined: Mar 2005
Post: #4
11-09-2012 04:54 PM

One idea that occurred to me would be for a few local people to buy some of the shops and become the landlord. Commercial property is cheap compared to residential.
An example would be http://www.findaproperty.com/displayprop...d=11320319
If you don't want to see a Fried Chicken Shop on the High Street, why not buy it for a mere £130k (complete with 4 bedroom flat).
You could easily rent this shop out for £28k per annum, and this doesn't include any income from the flat above. In 3-4 years you should have made your money back, which is a better yield than residential rental. Admittedly the lease is only 15 years so you don't get to keep the property, but you have 10 years pure profit.

Am I missing something (other than £130k in cash)?

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Anotherjohn


Posts: 347
Joined: May 2005
Post: #5
11-09-2012 09:49 PM

I can see where you're coming from. But this type of investment can be quite onerous. The Lease will contain all sorts of sub-letting restrictions and there will be rent reviews, which could be as frequent as every 3 years. There will also probably be an obligation for the Lessee to repair the whole building - including the window frames - and this could stipulate that it's done to a very high standard. All of this will also mean that the Landlord would need to be satisfied that the ingoing Lessee has the financial clout to cover all of the aforementioned costs. I reckon they'll be very lucky to get anything like the £130k asking price.

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Anotherjohn


Posts: 347
Joined: May 2005
Post: #6
12-09-2012 08:46 AM

I realised that I'd left some bits out and tried to edit the post immediately but the server must've crashed. So, for what it's worth -

There will also probably be an obligation for the Lessee to repair the interior and exterior of the whole building - including the roof, walls, window frames & drains -

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BobbyL


Posts: 2
Joined: Apr 2012
Post: #7
12-09-2012 03:16 PM

No small start up would want to take on the responsibility of managing rentals/repairs etc of adjoining flats, as well trying to get there new business moving even if the numbers look good on paper.

This location may not be right for a new FH Tofu Emporium, I might be completely wrong, Canvas & Cream seem to be doing well (great bagels). Location and understanding your target market is key to any business, you don't open a Coffee Kiosk 2 miles from a train station and call it 'Locomotive Latte'

FH isn't quite EastD just yet (heard that before), but there are signs of traction, start ups just need to have faith in their product/service and go for it, go ask some of the new shop keepers (love that old skool term) on Dartmouth road for their advice, people love telling their own stories!

And Landlords do need to wise up and have faith, even they were young once...

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P1971


Posts: 816
Joined: Feb 2009
Post: #8
12-09-2012 10:25 PM

After reading this post I have just realised how lucky I am to have such a great landlord!

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SEN


Posts: 53
Joined: Oct 2010
Post: #9
16-09-2012 04:18 PM

Seems to me that town centre retail/planning strategy is mad. I hadn't realised it was so difficult for shops, but it explains so many empty units (though that can't be great for landlords' income...).

Every time a new residential building goes up, what do the planners demand? More retail units. So the new flats opposite FH station have (empty) retail units. The new Greyhound dvelopment in Sydenham has more retail units. Meanwhile both FH and Sydenham are blighted by old empty shops, and families and young people struggle to find accommodation they can afford.

OK rant over, but is it just me who thinks this is a crazy state of affairs?

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jgdoherty


Posts: 282
Joined: Nov 2007
Post: #10
16-09-2012 05:18 PM

SEN has focused on a very important issue here.

This unquestioning implementation of planning policy has created voluminous over-supply of new retail units in new developments in upper Sydenham, Bell Green and Forest Hill.

And none has found a new tenant.

Any astute property negotiator would be pointing this out to landlords and their agents and would be seeking to secure reverse premiums for taking comparatively un-lettable units with un-competitive leases and restrictive t's & c's off their books.

Isn't the power of the market remarkable ?

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Tim Lund


Posts: 255
Joined: Apr 2008
Post: #11
16-09-2012 07:27 PM

SEN and jgdoherty are not alone, but they might feel so should they to try to introduce alien concepts such as supply and demand into the discourse of Council planners and their local amenity society interlocutors.

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blushingsnail


Posts: 364
Joined: Dec 2005
Post: #12
17-09-2012 10:35 AM

In some instances, the reason the Council requires commercial units within a development is because the site was previously used commercially and the Council doesn't want to lose the potential for employment use.

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Tim Lund


Posts: 255
Joined: Apr 2008
Post: #13
17-09-2012 03:19 PM

Quote:
the Council doesn't want to lose the potential for employment use.


This is a more general point than the one about supply of retail space, but the common issue is the need for flexibility. Just as designated space to sell things, before the internet changed everything, is less necessary, so is designated space for employment use in the age of teleworking. These old planning categories are dissolving before our eyes.

Landlords will know this better than most of us, and it's good to understand how the world looks to them.

This post was last modified: 17-09-2012 03:21 PM by Tim Lund.

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sydenhamcentral


Posts: 269
Joined: Mar 2008
Post: #14
17-09-2012 05:07 PM

Planning policy and common sense don't go hand in hand.

The retail units next to the station in FH will probably never be taken as they are ont he wrong location, aren't fitted out which means it will cost a fortune for any small businesses and it's in the wrong location for brands unless you get a Tesco Metro going in there.

In Kirkdale they pulled down interesting buildings and replaced them with sub standard, ugly building that no-one likes or wants to rent (and they are badly made).

The retail units in Bell Green stand some chance, but they are away from the car park and while visible from the road, aren't really connected to the car park. The only businesses that will go in there would be 'shop windows' for passing cars, such as, well, car brands.

If only these developers worked with local civic groups, councils and traders to develop the sort of retail space that small businesses want to need, to encourage growth of high streets. The sort of retailers or small businesses that can grow the economy.

Sounds too much like common sense to me rather than a policy.

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jgdoherty


Posts: 282
Joined: Nov 2007
Post: #15
20-09-2012 10:52 AM

The acceleration of change in perception and realities of planning categories is probably fairly accurate and it is worth remembering that the review and update of policy and local plans by LB Lewisham was only completed in the very recent past.

I have said elsewhere that Government proposes that we participate in making local neighbourhood plans and they want us to form and join bodies and state what we want to happen for future plans for our neighbourhoods.

The best means to do this either by consultation or dialogue is debatable but it cannot be anything other than effective to understand how best to engage in more directive dialogue with developers and authorities.

And to state clearly what we see as being positive as well as negative factors in any potential proposal with appropriate clarity and perspective.

So for example the units in the new developments in FH which will never probably be let to small retail businesses might be more appropriately designated as small office premises, let at discount-rates to start-up business that need seed-corn assistance.

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michael


Posts: 3,210
Joined: Mar 2005
Post: #16
20-09-2012 12:11 PM

I come back to the fact that there are good retail businesses that want to set up on the high street. I see no reason to provide discount-rates for offices when there are retailers who would be willing to take the units.

The empty retail units opposite the station on Perry Vale are in a great location, particularly for the morning and evenings. I could easily imagine that a coffee shop would be perfect for such a location, rather than the location of some of our fine coffee shops (half way up David's Road for example). Not that we have a shortage of coffee shops, with another new one opening at the weekend in the pool, but I think some people are a little too quick to write off the high street as a concept.

Forest Hill town centre is going through a period of transformation, many businesses closed over the last 10-20 years, but in the last few years we have seen new retailers opening up led by the pubs, cafes, and hairdressers, then boutiques, delis, and other niche retailers and services.

In the particular case of the units opposite the station, I don't believe they should have been allowed to be built without frontages and services installed. By avoiding this work they avoid paying business rates on the empty property and there is no incentive to reduce rents to attract businesses, especially with the up front cost of kitting out the units from nothing.

There are other retail units where conversion to offices would be sensible, the shop on Stanstead Road that has the application for a business business is an example where this might work well, without impacting the retail concentration in the town centre.

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jgdoherty


Posts: 282
Joined: Nov 2007
Post: #17
20-09-2012 03:03 PM

Many valid points there michael.

I am sure you know I was not presenting conversions to offices as a wholesale panacea for all circumstances.

Two sets of circumstances would normally apply a downward pressure on rent and even reverse premiums being introduced into the equation; first that landlords or their agents are not minded to accept that making un-competitive demands of good prospective tenants will drive them off to seek lets elsewhere and secondly that by taking the aggregate position of over-supply beyond just those few situated on Perry Vale and embracing Bell Green and upper Sydenham would normally combine to adjust the market.

In the realities of those market conditions good tenants should be able to secure good lets without onerous conditions attached and we would all benefit from a thriving and commercially beneficial retail environment with sufficient differentiation to attract custom from outside FH.

I think the point you make about the absence of frontages and services is particularly strong and it is to be wondered why any local authority would accept or consider these buildings as being complete.

If Building Control withheld Completion Certificates on a block basis thus preventing occupancy of any part of the building to be commenced until the block is complete in its entirety, would this not incentivise developers to properly complete those parts of the building that are deemed not to be residential units.

Or is that too simplistic.

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Tim Lund


Posts: 255
Joined: Apr 2008
Post: #18
24-09-2012 10:07 AM

Apologies for what is largely a cross post here from one I just put on the Sydenham Town Forum ...

In the scoping documents for the posts currently being advertise on SEE3 I found this:

Quote:
2.15 The high street also suffers from the disengagement and negligence of some landlords in improving their units. This is further exacerbated by the difficulty in obtaining information about who owns or rents particular units or in contacting absent landlords.


Source here

According to an Excel workbook maintained by our previous Town Centre Manager, there are c. 700 retail properties in Sydenham, Forest Hill, Honor Oak and Brockley, but with few details on landlords. However, it costs only £3 to obtain this information from the Land Registry, so I would think a first step should be to invest an amount up to just over £2,000 in collecting this official information.

There will be much more to it than this, e.g. how to keep this information up to date, and what sort of restrictions on its use were imposed by the license under which the Land Registry would supply this data. To which end I have just emailed 'copyright@landregistry.gov.uk' as follows:

Quote:
Dear Sirs:

I would like to know what the approach of the Land Registry would be to licencing its information for use by an organisation set up for a community purpose, e.g. the regeneration of a local High Street. The context for this request is a ‘Portas Pilot’ project supported by my local council (LB Lewisham) – ‘SEE3’ – which has identified a problem:

[quote and source as above]

The ultimate aim would be a database of such information get up to date both from ‘crowd sourced’ information – e.g. threads such as this ‘New Openings, New Closings’on a local web Forum - and official information public domain but still copyright information such as yours.

Your general advice would be invaluable, and even more any similar uses of your data.

Tim Lund

cc. Petra Marshall, LB Lewisham / SEE3


I am sure I am not the only one on the Forum who would like to help the SEE3 team in this way.

This post was last modified: 24-09-2012 10:09 AM by Tim Lund.

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lacb


Posts: 623
Joined: Mar 2005
Post: #19
24-09-2012 11:49 AM

This seems like a sledgehammer to crack a nut to me but perhaps I am missing something.

Could there really be 700 vacant/neglected retail properties in the local area? If not, why spend £2000 plus the admin in maintaining a comprehensive list when only £3 is required per empty premises?

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FHSoc


Posts: 134
Joined: Nov 2009
Post: #20
24-09-2012 01:27 PM

There are a number of interesting points in this thread, however I would like to correct a few inaccuracies.

  • There have been offers for the empty units opposite the underpass on Perry Vale, but the agents are demanding £22,000 pa in rent. This cannot be justified by the business plans of those seeking to open a business there after factoring in the cost of fitting out the space, so the units have not yet been rented.
  • There are 188 retail units in Forest Hill town centre, of which at least 24 are not operating as businesses. We already have contact details for many of these spaces and are working with Lewisham to see if they can assist us in tracking down the remaining landlords, so would not require £2000 to get all the details. Councillor Best and Kirkdale Village are building the database for Sydenham and Kirkdale respectively.
  • If you have any questions or ideas regarding SEE3 (the Portas pilot), please email info@see3.co.uk to ensure that you are not duplicating effort - they can use all the help on offer, but we need to make sure we work together. The core team is trying to keep people informed via the website, Twitter and Facebook, but they are all volunteers, so their time is limited and it may take a while to respond.

One aim of SEE3 is to remove barriers to business. Making it easier to find the landlord is just one way of doing this. Other ways being developed by central government include model leases and licences which will be available for free.

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