The coronavirus pandemic has unsurprisingly hit the high street hard but there are signs that things are getting better. There was an improvement in commercial property vacancy rates over the past quarter, according to the British Retail Consortium (BRC). The overall vacancy rate fell to 14.4%, 0.1 percentage points below the Q3 2021 level, while shopping centre vacancies improved by 0.3 percentage points.
Now, these latest figures aren’t a reason to panic. Savills believes that the stage is set for retail to make a comeback in 2022, recently stating that the next five years will see capital values rise in select parts of retail.
What is clear however is that commercial landlords need to regularly examine their strategies for finding a suitable tenant.
If you decide to do it yourself then there are a number of things to consider. The most pressing question is how are you going to market your property?
This could be as simple as a sign outside of or poster in the window of the vacant property, all the way through to a video ‘walk-through’ presentation of the property. If you do opt for the latter option you’ll need to think about how you’re going to ensure landlords are going to see the video. How are you going to promote your property to would-be tenants?
Unlike the residential lettings market, there are few comprehensive web-based portals available to source suitable commercial clients. Instead, commercial property brokers and agents will have their own lists of clients so partnering with a broker or agent can be a shortcut to finding a tenant for your commercial property. They will typically be dealing with SMEs, large firms, property management companies and other brokers so they could be an ideal partner.
If you have marketed the property but still find yourself struggling to find a tenant, then perhaps the property itself isn’t what potential tenants are looking for in this day and age. Trying to compete with online shopping means firms are having to change the way in which they try and attract custom. Many are opting to create a different retail experience from what has gone before, with a shift to more enticing fit-outs. This may involve a not insignificant spend and so landlords need to factor this into their plans.
If this is the case, then you need to partner with a lender which deals with commercial property owners as a matter of course and not just on occasion. For example, at Alternative Bridging Corporation, we regularly fund commercial refurbishment projects. Borrowers generally opt for one of our short-term loans or our innovative Alternative Overdraft product in order to fund improvements to the property. We then can offer a term loan at the end of the project, based on the increased value of the property, typically for a period of three to five years.
The commercial property sector has its challenges but there are good opportunities out there for forward-thinking investors who present an appealing property to the market. Working with the right lender will make achieving this much easier.
