High Street Leases Must Be Shortened
High Street leases must be shortened
Shopping Centres are reacting quicker to lease length that the High Street
Research taken place highlighted the growing downward pressure on lease lengths. It also shows that although many high streets have the greatest need to attract retailers they are responding more slowly to market conditions than stand-alone Shopping Centres
For most of the past decade, a 10-year term for leases on both the High Street and in Shopping Centres was considered the norm. However, the average… term reflected by the new Shopping Centres leases dropped sharply to 7.5 years. By contrast, the corresponding figure for High Street leases was virtually unchanged at 9.9 years. It is clear that in general Retailers are demanding shorter leases and, at present, its clear that Shopping Centre landlords are responding more quickly than their High Street counterparts.
The fragmented ownership of the High Street makes it more difficult than a Shopping Centre, their flexibility is further illustrated by the continued tendency for turnover leases in which the rent payable is geared to the turnover being achieved by the retailer. While turnover rents are rarely granted on the High street or on retail parks, they continue to feature in more than a third of the Shopping Centres resent lease transactions.