Page 47 - RLI September 2019

VOYAGER: REVO INSIGHT

A Time of Change

Ahead of the Revo Liverpool event on the 17 – 19 September, Ed Cooke, Chief Executive of As the only organisation that brings together retailers In October I was invited to present evidence to the
and property owners we have a unique opportunity to Housing, Communities and Local Government Select
Revo took some time out to talk to RLI about the current state of the UK retail market and drive a reform of retail leasing, and it is an opportunity we Committee on the future of our urban centres and made
will grasp over the coming months. clear that Government must stop kicking the can down the
the challenging time that has been faced by all ahead of a particular October deadline… The recent spate of CVAs has also exacerbated the road and act now to ensure these places, the social hubs of
problem of how to value – and indeed define – retail communities, still exist for the generations to come.
property. The uncertainty created by CVAs and the changing We have recently urged Sajid Javid in his new role as
e can all reflect on a challenging year in a single creditor-group bear all the financial pain of a corporate role of physical retail has caused the financial markets to Chancellor of the Exchequer to conduct a proper review
the retail property sector, as ‘the B Word’ restructuring. We urgently need clarification on how and in write down values, but it is becoming clear that the accepted of business rates, which we and our members feel is an
took on a whole new meaning, continued what circumstances the CVA legislation can be invoked, and we ways of describing and valuing assets also require scrutiny as archaic form of taxation which does not recognise how
W evolution of consumer purchasing behaviour, are working with our retailer and property-owner members, as the form and function, and therefore how retailers attribute value is created in the modern digital economy. By easing
an outdated tax system and questionable restructuring well as partner organisations including the BPF, to define ‘rules value to their physical presence, changes. the disproportionate burden on physical retail, we can
practices combined to create difficult and uncertain conditions of engagement’ that mean there will be greater consultation In 2018 we began a consultation on a new Revo UK ensure the town centres of the future are vibrant places to
for retailers and property owners alike. and collaboration before a CVA is proposed. Classification for Retail Assets, proposing a move away shop, as well as work, live, socialise and spend leisure time.
The structural change in retail is well-documented, The full impact of the recent run of insolvencies will from the ‘primary vs secondary’ vernacular to a new It has been a tumultuous year for all of us working
but in the past 12 months it has become increasingly clear take years to play through, but it is already clear that the model that classifies assets by their specific function and in the retail sector, and it looks likely to be another
that parts of the UK planning and legal systems, and many turmoil of the past 18 months will re-set the relationship purpose. The result was a new code, which distinguishes challenging year ahead. However, in times of change
of our sector’s models of doing business are simply not between the traditional ‘landlord and tenant’ – a term that between ‘Destination and Lifestyle’, ‘Community’ and collaboration and innovation becomes more important
designed for this age, and pace of change. really should be consigned to the graveyard of corporate ‘Specialised’ centres, according to factors including their than ever. There are already signs that many businesses in
The inability to adapt fast enough has led to an dialect. We hope this in turn will lead to a better, more size, catchment, occupier-profile and dwell times. We think the retail property sector are adapting to the new reality,
unprecedented level of financial distress, in many cases sustainable model for leasing space and doing business. this more nuanced definition of retail property is helpful and will become more creative, sustainable and resilient
managed through CVAs – now the insolvency tool of choice Central to this is creating greater transparency, for the entire community, reflecting the modern retail in the longer term as a result.
for retailers who need to cut costs urgently in order to particularly the sharing of trading data. The UK retail market and the evolution of shopping centres to become We look forward to welcoming many of you to Revo
sustain trading. market remains opaque compared to the US and other multi-use assets where retail is just one component. Liverpool 2019, which will bring together the full diversity
We have campaigned vociferously to highlight how the European countries which is a deterrent to property Finally, the march of retailer CVAs and job losses has of people and organisations involved in retail placemaking,
legislation is being abused to enable some retailers to terminate investors and means lease negotiations are approached also reignited the debate on the future of UK high streets to discuss how we work to navigate today’s challenges to
lease agreements entered into in good faith, and in effect make with uncertainty and suspicion by both parties. and town centres. create the places of tomorrow.

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