Shop investment performance.
31 July 2026(2026-July: LinkedIn) Investors like shops let to multiple retailers. The capital value of the investment covenant tends to hold its value. Multiple retailers generally have the resources to pay rent and honour lease commitments without reminder. But all that comes with a health-warning.
Come the rent review, the landlord is likely to meet resistance to increase by the tenant’s in-house/external surveyor. In prime positions where multiple retailers dominate, the network is tuned to exchanging evidence and toeing the party-line of nil increase. Referral is common, particular where multiple retailers are in trading positions whose retail profile is dominated by shopkeepers and local traders. On renewal, the landlord faced with the possibility of a lower rent and/or a short term lease with tenant break. Short leases are not only to avoid the upward-only rent review – a need that the imminent ban on u/o could end – but also the tenant has no confidence in its business model in that particular trading position or at all. In summary, in exchange for the pride in owning a shop let to a multiple retailer, the prospect for the landlord is the likelihood of non-recoverable costs and an underperforming investment.
Contrast that with a shop let to a shopkeeper or local trader. For landlords of these investments, the likelihood of a rent increase at review and renewal is higher because such tenants are realistic. Inherent in such tenant thinking is that, come the rent review and renewal, the rent is bound to go up. Unlike multiple retailers with layers of inefficiencies, too many mouths to feed and director life-styles to maintain, chief-cook-and-bottle-washers do not.
A minority of surveyors are on a crusade to encourage ‘small’ tenants to take professional advice for rent review and lease renewal. The claim that there are savings to be had when you know what you are doing, the implication that such tenants do not, is valid. Landlords have nothing to fear. Such surveyors do themselves disservice by overpricing their services for the market they want to cater for.
The number of shops that exist today stems from over-estimation of demand by landowners and developers since the late 1880s and at various times during the 20th century, and since. Over-estimating is an ingrained habit that nowadays a new multi-storey residential or office development typically includes ground floor shops.
Retailing is a entrepreneurial paradise for selling ideas. There are two types of retailer: a minority that has got what it takes to attract custom, and the majority that doesn’t so depends upon the minority to generate passing trade. Whenever the minority relocate, they take their customers with them. For those that stay put, footfall drops. Not all relationships are intended to last indefinitely, many are lessons.
The warning signs of trading positions and town centres in decline long before it is obvious are easy to spot when you know how.
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