1. December 2020

  2. New era awaits ‘grab-and-go’ food across London’s office powerhouses

    2 December 2020
    The ‘grab-and-go’ food sector has been hard hit everywhere in London but particularly so across the Square Mile and at Canary Wharf. Trade in these locations is predominantly generated by office workers – more than 600,000 of them across the two centres – and without them there was little reason for operators to re-open even between the Lockdowns.
    The household names of the sector – Pret A Manger, Itsu, Leon, Wasabi, Caffè Nero etc – have all come under extreme corporate pressure and there has been a rash of CVAs and lease restructuring, which has led to a surge of stock coming to the market.

    At a time like this, it might seem odd to be talking about opportunity but there will clearly be a reset of the sector across these two lucrative locations and it makes sense to try and look beyond the current situation.

    There are opportunities for both landlords and occupiers. Landlords can have faith that the market will return in these office-based powerhouses. However, pragmatic and flexible solutions are required in the short-term to maintain some form of business continuity until the workers begin to come back in significant numbers.

    Rent reductions are a difficult pill to swallow for investors, but looking at a more turnover-based lease model can help ‘keep the lights on’ for existing occupiers while also encouraging new concepts who are waiting in the wings to take advantage of the new affordability of establishing outlets in the City.

    Reduced occupational costs will provide welcome relief for existing tenants. For new concepts, the market offers the opportunity to test locations that were once prohibitively expensive on a more cost-effective and risk-shared basis. And being able to take over space that was already configured and fitted out for ‘grab-and-go’ is also a significant plus for both landlord and a new occupier as it minimises start-up costs.

    The established operators listed above - and in particular Pret - have dominated the sector during the past 20 years. It’s time for them to be joined by a new generation of operators, and 2020 may prove to be the year when the success stories of the next two decades begin. 

    Yes, there will be an element of trial and error and not every new entrant will flourish. But for landlords it is a chance to perhaps lock-in to the ‘next big thing’ - whilst generating income and mitigating business rates liability in the short-term.

    With an effective Covid-19 vaccine looking like it could be available to the most vulnerable this side of Christmas, the prospect of office workers returning to these iconic locations is becoming progressively more possible.

    This will undoubtedly be a tough winter for society and business but by next Spring, we may once again start to see a return of hustle and bustle to the City and Canary as hungry workers seek out morning coffees and pastries and tasty lunches to take back to their desks. 
  3. October 2020

  4. Small is beautiful for the City

    5 October 2020
    Following the global financial crisis in 2008, there was significant growth in new business start-ups across the Square Mile and neighbouring locations in the City of London.
    They were often created by people who’d lost their jobs as a result of the crisis or who decided that - with the market disrupted - it was the right time to strike out on their own. In the intervening decade, many of these start-ups have evolved into flourishing SMEs which contribute to the diversity of the City.

    Our latest London City Occupier Insights report shows that - despite the perception that the City is dominated by ‘big beasts’ - more than 90% of its occupiers are actually classified as SMEs. This means that around 25m sq ft - about 50% of the Square Mile’s entire office stock - is leased by companies occupying 50,000 sq ft or less. 

    With major banks having been redeploying staff to the regions for a number of years, the occupier profile continues to broaden. Media & Tech businesses which have not been traditionally associated with the City have increased their presence in the location by 300% in the past decade and now occupy more than 7m sq ft of offices.

    SMEs and start-ups are now an important part of the market and from early indications are weathering the current storm. In the wake of the pandemic, we can also expect another crop of new businesses to add to the City’s diverse occupier base.
    Small will continue to be beautiful for the City.
  5. August 2020

  6. High Street Retail: will fortune favour the brave?

    10 August 2020
    Will a price softening to levels never witnessed previously be sufficient to attract investors?
    The almost total disruption of physical shopping environments has accelerated trends that were already underway. In the case of High Street shops - while yields had been on the drift for some time – the Lockdown brought a sudden shift which has crystallised a growing feeling that values had not reached appropriate levels. 

    In just a few weeks we’ve seen many High Street yields move out by 200 basis points or more. This is a trend which has not just been witnessed in secondary locations but even in some of the UK’s most desirable towns and cities. In many of these locations where prime yields had achieved up to 4.25% previously, assets are now being offered or transacting at yields of 7% or softer. Examples of where this has been witnessed include Guildford, York, Winchester, Leeds, Kingston, Richmond and Nottingham.

    In terms of High Street valuations, the pandemic has abruptly shifted the market to where many investors felt that it should be. Any arguments to the contrary seem to have been superseded by recent events. 

    Of course, the question now is whether this is an over-correction? Can it really be right that you can buy assets in prime locations with five years-plus of income let to some of the most recognisable brands including Holland & Barrett, JD Sports and Specsavers at an initial return of 8%+?  Clearly the quantum of rent being paid is the other crucial factor to consider for investors who are brave enough to take comfort that any current or any future retailer could afford to pay a similar level.

    This would certainly seem to represent value compared with other asset classes – especially when interest rates look like they’ll continue to stay low and the gilt and equities markets are respectively characterised by low returns and volatility. Even if you factor in the growth of online retail and the converts it will have made during the Lockdown, there is still clearly a place for physical shopping space. 

    Paradoxically, the High Street - which had become the ‘poster child’ for the problems of the retail sector - could be about to become one of the best value buys in the property market. 

    Or as Warren Buffett recommended: “Act greedy when others are fearful”.

    Pierre Kunkler
    Director, Retail Capital Markets
    Colliers International
  7. London Offices – No distress yet

    4 August 2020
    As office workers gradually begin to return to their London workplaces, we’re beginning to see how the pandemic has impacted the sector.
    Encouragingly, whilst demand for office space has fallen and deals have been significantly impacted, we’re still anticipating a healthy uptick in activity as and when the situation returns to some sort of normality in 2021. 

    As our latest London Offices Snapshot reports, vacancy rates are still well below average and with many occupiers looking to retain space to accommodate offices redesign strategies, the London office market continues to resist the prospect of oversupply issues. However, ‘grey space’ – offices that are not needed an occupier but are not officially on the market - will most likely be the driver of any vacancy rises throughout the remainder of the year. 

    Ultimately, the unwinding of Government support in late October will be the true test of potential distress amongst London businesses, but this will be most keenly felt in the retail, leisure and hospitality sectors and less so across the office market.

    And if ‘grey space’ creates some new supply then it will be counterbalanced by the continued dearth of new Grade A space – and this is what most occupiers want. Delivery of new product will be even more constrained, delayed or possibly mothballed. This will depend upon scale, funding concerns or even geography. New Grade A space will remain at historic lows throughout 2021 and into 2022.

    Contrary to what people might imagine, we’re still seeing healthy amounts of space put under offer, albeit much of it dating from pre-Lockdown times. Assuming lockdown easing continues and there is a gradual return to normality, leasing volumes will improve in Q3 and into Q4, but we still expect to see annual take-up levels at least 25% below the long-term trend. 

    Headline rents are holding firm for now, although we expect downward pressure towards the end of 2020 as grey space grows and occupiers revise requirements and economic support is removed. Next year looks far more encouraging with a potential bounce-back in headline rental growth as the availability of Grade A space remains extremely low. 

    So, there’s no need for distress signals at present and we envisage the market to progress as we navigate our way into 2021. 
    The Author
    Guy Grantham
    Director | Offices research

    +44 20 7344 6793

    +44 779 596 3710

  8. July 2020

  9. A New Start for the Great British Pub

    23 July 2020
    The arrival of the Lockdown shuttered pubs for three months and it’s only now that they’re gradually re-opening. However, that is not to say they were all idle during that time. Hundreds in the capital with a good food offer reinvented themselves as takeaway and delivery hubs while others diversified even more.
    Groups like Urban Pubs & Bars which has London pubs including The Gatehouse in Highgate Village and The Whippet Inn in Kensal Green have offered fresh fruit and veg along with meat boxes and also the opportunity to purchase some of your favourite beer and wine to go.   It will be interesting to see where this diversification leads especially if there is a growing trend to localism – and what’s more local than your ‘local’?

    They’re already multi-faceted venues: places to grab a drink with friends, have a meal, watch live sport, or to showcase your general knowledge skills in the great pub quiz.  Pubs have long trading days and can explore how they can further utilise both this and the, often considerable, space that they occupy. There will be substantial demand for spaces where people can work without commuting into the office and you can see pubs in satellite locations around London having a role to play in meeting this demand. 

    For pubs to have a blended offer which encompassed retailing, food delivery, workspace, entertainment and not forgetting what’s on offer behind the bar could prove compelling and lucrative.

    The future of the Great British Pub certainly shouldn’t be judged by the rather ‘near beer’ version we’ll have for the immediate future. Yes, it’s great to be back in your favourite pub again, but social distancing constraints means that for the time being at least, we won’t be able to enjoy the same convivial interaction which sparks those memorable nights.

    But what is certain is that the British pub will survive and adapt. We’ve had them for nearly 2,000 years since the invading Romans opened their tabernae - or ‘taverns’ - which morphed into alehouses and on to the pubs we know today, and it will be fascinating to watch their next stage of evolution.

    Ross Kirton
    Director, Head of UK Leisure Agency
    Colliers International
  10. June 2020

  11. Homeworking is not a long-term answer

    22 June 2020
    During the past three months there has been a considerable amount of adaptation in how we work. Our dining tables, beds and spare rooms have become our new offices. We are now fully versed with how to conduct our meetings over video conference and are all too familiar with the highs and lows of our broadband connection
    On the whole, I’ve heard only positive things about the transition to home working and how morale has held up. I think the key to the success is the fact that we have all been placed in the same circumstances at once. Couple this with the fact that we are all working with people we, for the most part, have long-term relationships with and the transition hasn’t been as painful as many would have thought. Teams have learnt to trust each other more and be more transparent in the work they are undertaking. 

    However, the picture would look very different if we had been trying to work remotely with teams that we hadn’t spent time within the office, or with clients that we hadn’t met face to face over meetings, coffee and various industry events. 

    This is where the office comes in. In the short-term we have all managed to navigate this new way of working. However, it is harder to imagine it being as successful in the long-term when there are factors such as new members of staff, new clients and new instructions thrown into the mix. Connections are made face-to-face and over a period of time. We are by now all familiar with the ups and downs that a poor wifi connection or noisy dog can bring to our virtual meetings. There’s no escaping that offices will look different as long as social distancing measures are in place, however their role in providing a hub for collaboration, new ideas and much needed human connection won’t be diminished by this current crisis.

    Many of us have had to rapidly place trust in our team members and their ability to work from home, and this is by and large what has made the transition so smooth. For now, we are all following government and industry guidelines with regards to working from home, and none of us know just what the short-term future holds. However, it will come as a great relief for many to be back safely in an office where they can have conversations face-to-face, to discuss new ideas over coffee and get back the separation between work and home life.
  12. May 2020

  13. Shopping for victory?

    18 May 2020
    The commemoration of VE Day over the weekend highlighted both the efforts of the Allies during the Second World War and all those on the ‘Home Front’ who strove to support each other.
    Whilst it would inappropriate to directly compare the gravity of that situation with now, if we are going to mend the UK’s economy today then a lot of the challenge will have to be met domestically on our ‘Home Front’.

    For example, the shops of London’s West End have been heavily reliant on international tourist spend which accounted for more than 50% of total retail sales last year. The easing of lockdown restrictions will be gradual but if retailers are going to get some respite it will have to be in the form of domestic spending.

    Accordingly, London will need to look at how it can woo people back into the capital.

    Clearly, any measures cannot be antagonistic to the precautionary measures still in place to counter the pandemic. However, there will have to be something done proactively if shoppers – many of whom have become very comfortable with online retailing in the past two months – are to start repopulating our famous shopping streets.

    Some pundits believe that as the lockdown eases there will be a spike in ‘real life’ shopping as people enjoy greater freedoms of movement but this phenomenon is likely to be short-lived and tempered by the harsh realities of increased unemployment, wage cuts and poorer job security.

    Non-essential shops may be able to open as early as 1st June as part of the government’s new “road map” to reactivate the economy.  There will, however, still be challenges getting into the West End as we are discouraged from using public transport which must remain at 10% capacity to run safely.

    Both the Government and the London Mayor's office should therefore be looking at positive action to make it easier and cheaper to get into the capital (Accessibility); to provide some monetary incentives for shopping in town (Financial); and also allow retailers more flexibility to suit shopping hours to the new situation in which we find ourselves (Regulatory).

    We welcome pop-up bike lanes and the fast-tracking of e-scooter trials, but clearly the government will need to go much further with a raft of immediate and long-term initiatives.  Proposed measures could include:


    - Legalise electric scooters and bikes – legalisation is needed as soon as possible to bring the UK in line with major EU countries such as France and Germany. New York has also recently legalised and plans to invest in new scooter lanes.

    - Cycle Lanes – major investment in “Smart Cycle Lanes” which have been pioneered in The Netherlands.

    - London Transport – once social distancing measures are eased, fares to be free of charge from Zone 6 into Central London after 10am.

    - Pedestrianisation of Oxford Street – this is an opportunity to look at the proposals again and re-engage with residents and major stakeholders to make this happen.


    - VAT – 100% VAT exemption on in-store purchases to compete against the rise in online shopping habits during lockdown.

    Coupons – the Chinese government is using a voucher system to stimulate shopper spending. Vouchers can be redeemed if you spend a certain amount at a participating retail and leisure businesses for a limited period of time.

    Business Rates – a wholesale restructuring of the system must now be an absolute priority.


    - Sunday Trading Laws - extend opening hours to encourage footfall whilst keeping it at manageable and safe levels.

    The road ahead is rocky but with creative policies and occupier resilience London can weather the storm and once again become one of the most exciting places to shop, eat and drink in the world.

    If you are an occupier of a retail property and would like to discuss lease strategy, please contact:
    Peter Flint - Co-Head of Brand Representation
    Central London – Retail Agency
    07870 999192
  14. April 2020

  15. Investors target supermarkets as tills continue to ring

    20 April 2020
    The received wisdom at present is that UK property capital markets have pretty much gone into suspended animation in the face of the pandemic, but this certainly isn’t the case in the grocery-led sector.
    There are currently seven substantial supermarket transactions totalling around £205m which are either under offer or due to imminently complete. And these are not fire sales from struggling funds: the average net initial yield on the deals is a shade under 5%. This is in addition to the £325m of supermarket deals that we’d already seen transact in the year to date, and is accelerating the buying trends that we identified in our 2020 UK Grocery Report

    While the financial markets may remain unconvinced about the long-term prospects for the UK supermarket majors – Tesco’s share price is strangely down about 13% since the beginning of the year – real estate investors remain sweet on the sector. 

    Exceptional grocery trading, triggered by the extended isolation measures brought forward by the Government, will mean that the Big Four – Tesco, Sainsbury’s, ASDA and Morrisons – together with the likes of Waitrose, the Co-Op, Aldi and Lidl, are set to see strong 2020 revenues. In March, grocery sales of £10.8bn represented year-on-year growth of 20.6% – and reflected a level higher than the typical trading month before Christmas.  

    Despite pleas for us to keep our distance, the supermarket giants will be particularly pleased by the number of in-store visits. In the week ending March 21st, shoppers on average each made three additional shopping trips than usual, equating to 79m more trips, and an extra £1.9bn spent on groceries. Yes, online trading has also boomed but the harsh reality is that the majors don’t make money from home delivery owing to the high fulfilment costs and low margins that it entails. 

    So for the present, a nation which had taken to eating out on a regular basis during the past few years has returned to the family dinner table - or eating ready meals while bingeing on Netflix.

    Of course, the question is will we go back to our previous ways once we again have freedom of movement? Certainly the charms of home cooking or ready meals may have palled by then but even so, if we are in for tougher economic times, then the nation’s appetite for eating out is likely to be blunted by its ability to pay.

    However, the need to eat and the growth of ‘comfort eating’ in the face of the current grim situation is going to underpin supermarket performance for some time to come.

    For property investors looking for supermarket assets they are likely to be confronted – metaphorically speaking – by shelves every bit as bare as those which appeared nightly on our TV screens a couple of weeks back. The sector – with its long-leases, index-linked rents and strong  covenants – was already extremely popular with investors. Now the argument to buy grocery-backed assets – or indeed to hold onto them – is even more compelling.
  16. Landlords Need to Consider the Pandemic Legacy

    15 April 2020
    Once the Covid-19 pandemic has abated and the UK retail property market returns to some semblance of normality, the way in which landlords reacted to the crisis will be forensically assessed by retailers.
    The hard lessons learnt by both sides will reshape the landlord-tenant relationship and people will have long memories with regard to how all parties behaved when the chips were down.
    The response from landlords has so far been extremely varied and generally falls into four categories:


    No Support

    Limited Support


    Full Support

    Statutory Demands for non-payment of rent & Winding Up Petitions

    Monthly rents offered


    Deferment of rent to be repaid over an agreed period (typically 12 months)


    Reduced service charge payments

    1-3 month rent holiday


    No service charge payable


    Turnover only for next 3-6 months

    No rent payable until tenant is able to re-open


    >6 month rent free


    Rent deposit return to assist with re-opening costs and cashflow


    The package of measures the Chancellor has set out to get businesses through this period of disruption caused by the pandemic are well documented, but clearly the Coronavirus Job Retention Scheme and 12-month business rates holiday have given people some breathing space and chance of survival.

    Landlords have also started to offer bespoke assistance depending on the circumstances of their tenant.  Clearly if a retailer is able to continue to trade successfully though the crisis (e.g. food stores, pharmacies, newsagents) assistance is not required.  It is also true that some retailers are better equipped to survive than others if they have cash reserves or have the ability to continue to trade online more successfully than others.  All these factors should be taken into consideration during these negotiations.  We are seeing the more pro-active owners taking the opportunity to understand how their tenant’s business works by requesting detailed P&Ls and turnover projections to inform their response.

    However, the harsh reality for retailers which are unable to trade during the next few months is that even support from landlords may not be enough unless a broader approach is taken. The next Quarter Day on June 24th is assuming huge significance. If the levels of rent collection then are at the same level – or worse – than the March Quarter Day then landlords will have less and less room to manoeuvre.

    In this context, rather than provide piecemeal support, landlords may be well advised to explore the potential for a wider restructuring of leases. Restructuring could give retailers the required assistance they will need during the next 6-9 months and landlords would have a clearer view of the way forward for their asset. This could also give more reassurance to the providers of any debt secured against a property.

    Restructuring is also more of a process of give-and-take. If retailers are willing to remove upcoming break options or agree to lease extensions (if there is an imminent lease expiry), landlords may be able to more easily justify giving them the assistance they require and for their businesses to survive.

    This approach may be the only way to save fantastic retail and F&B businesses disappearing from our High Streets, whilst also maintaining landlords’ income streams and investment values.

    When we return to a more stable market, retailers are likely to have more choice available to them in terms of new store opportunities. Given these options, they will consider how landlords responded to the lockdown market and will be more likely to deal with those who proved themselves constructive and supportive. And, of course, landlords will also seek out the occupiers who took a similarly positive approach.

    The pandemic will undoubtedly bring structural change to our industry, but it will also bring an opportunity to re-balance the landlord & tenant relationship making it a more collaborative and open relationship.

    If you are an occupier of a retail property and would like to discuss lease strategy, please contact:
    Peter Flint - Co-Head of Brand Representation
    Central London – Retail Agency
    07870 999192
  17. Architecture firm draws up plans for move to creative Clerkenwell

    9 April 2020
    Clerkenwell’s reputation as a creative hub continues to grow and with it comes a whole host of occupiers, restaurants and bars that keep the area vibrant...
    ...including Runway East, Malmaison hotels, Fix Coffee and Breddos Tacos. Transport links are another string to its bow with Farringdon set to become a Crossrail station and Barbican and Angel within walking distance.

    Conran+Partners are the latest names to move in to the area with the architecture firm taking two floors at 30a Great Sutton Street, a total of 8,615 sq ft of space. Located slap bang in the middle of Clerkenwell, the three floor office building has recently undergone a complete refurbishment by landlord Harel Insurance and now provides modern, media-style space. A brand new reception area has been created, and features in the office include full height glazing, exposed services and new shower and cycle facilities creating an environment that lends itself to creative firms.

    Conran+Partners expressed a desire to move to Clerkenwell and has chosen the property as its new home as part of its expansion plans. The firm and will be the first occupiers to move in with the further three floors still available through the Colliers City Fringe office.

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