There has been so much put in front of us relative to the COVID 19 Virus, I sense that we are becoming obsessed with it and are failing to communicate a recovery.
Recently I have been called by several people to give an opinion on individual leases and the impact of negative occupation during the current closure.
It is apparent that most property owners and tenants will be separately looking to their leases for an opportunity to determine their respective positions in this diabolical economic environment that currently enshrouds all business activity.
A lease and its implications is a powerful tool in difficult economic times. However, the majority of current leases, particularly a shopping centre lease, will exclude the opportunity for tenants to not withhold rental and outgoings payments. In other words, Landlords in the majority will be entitled to collect. There will be some exceptions where leases specifically reference the inability of tenants to access their premises.
However, there will be many retailers and tenants currently in lockdown who will be stressed by their positions and a resolution to their predicament will be required post haste. Conversely, a number of Landlords will be concerned at potential tenant failure and their ability to pay mortgages.
Without doubt, the potential for business failure is paramount, consequently affected parties will need to pull together to survive this current crisis.
Of concern will be the shopping centre industry and in particular centres that have only opened in the past few months. The traditional opening of new shopping centres enjoy a honeymoon period which sees high levels of sales as customers enjoy the new experience. Gradually that level of excitement dissipates and the trading levels of stores reduce to a moderate level. Thereafter sales become normal and fluctuate according to the seasons.
The recent lockdown by Government gave retailers and all business activities just 48 hours to prepare to close. As a result, food outlets would have had to dispense with food that could not be retained, and fashion retailers just had to lockup and will be left with seasonal unsold stock, and probably new winter stock either in warehouses or on the water arriving from overseas. All retailers will be affected, given the closure for four weeks or more, with the realisation of wages and overheads to pay.
The impact therefore on new shopping centres in particular is apparent, where tenants will have to start again to entice reluctant and potentially unemployed consumers to their new premises. Unsold stock lying in closed stores and unsold new stock in storage and arriving will place huge financial pressures on retailers. The recovery will be very painful.
It is time therefore for current leases to be shelved and for landlords and tenants to get together in an attempt to salvage a joint recovery. This is not just an action for Retail Landlords but for all landlords. Closure of some business will be inevitable, but where recovery can be achieved by tenants and landlords in a pre-determined effort to survive, then they should do so. Having a tenant close does not produce rental for a landlord and retaining tenants over the next few months will be vital for New Zealand’s financial recovery.
SITE Property Amalgamates with RCG
RCG is pleased to announce the amalgamation of services with Site Property. The integration responds to an increased demand for our property consultancy and management services. We welcome the introduction of Stephen Chung and Karen Chew, both as Associate Directors, whom will further elevate our service and delivery for our clients. Their leadership and significant experience will naturally support and add further value to our architectural and development projects.
Stephen has a wealth of retail tenant representation experience, and has been intimately involved across the property sector for over 30 years. He is a qualified accountant, registered valuer and licenced salesperson, and brings a unique perspective to the property decision‐making process. Having spent some time growing retail store networks for multiple retailers in New Zealand and Australia, Stephen is familiar with most major markets in Australasia. Stephen currently is the lead consultant for numerous national retailers including Kathmandu, Bendon, Lighting Direct and has extensive experience looking after Noel Leeming Group. Stephens’s role is as Associate Director – of Tenancy Services and Consultancy for RCG.
Karen also joins RCG as Associate Director, supporting our Property Management. Karen works across several sectors including Property and Facilities Management, Retail Planning, Lease Negotiation and Asset Management. She has a strong background in Project and Operations Management, having had experience in the Hospitality, Construction and Health and Fitness industries.
RCG is also pleased to announce the appointment of Grant Duncan to the team at RCG Realty. Grant has been property and development manager for Briscoe Group for the last 17 years and prior to that at DB and NZ Liquor. Grant will be working alongside the team to assist in developing opportunities for RCG clients.
Vish: A Dulux Colour Finalist
RCG has been selected as an Australasian finalist in the Dulux Colour Awards, for our project, Vish. The project is the only selected NZ entry within the competitive Commercial Workplace and Retail category.
Vish is a new beauty services retailer within Tauranga Crossing Mall. The brief was to create a calm and welcoming space which is contemporary and includes subtle references to the art of henna and eyebrow threading. The material palette includes many Dulux and Porters paints, layering textures and colours to striking effect within the small space.
Local Media highlights from the past week...
The National Party leader supports the start of discussions about a possible exit plan from level-4 restrictions, as long as the government remains focused on enforcing an effective lockdown.
More and more million-dollar houses are being snapped up in Waikato, with sale prices in Hamilton and Waipā stoking the growth. Latest figure from Real Estate Institute of NZ show 405 Waikato properties sold for at least $1 million in 2019 - an increase of 16.1 per cent on the year before.
Barfoot & Thompson's March sales figures show the market was on a roll before the lockdown with record average and median selling prices