Time to accelerate asset repositioning
17 Jun 2021
In an effort to support businesses and residents, amidst the onset of COVID-19, governments in the UAE, both on a federal and emirate level, have enacted a range of fiscal and monetary policies. These stimulus packages have aimed to provide market liquidity, reduce the cost of doing business and encourage investment through the cancellation of selected fees and easing of regulations.
Following this lead, developers and mall operators in the retail sector also enacted a range of initiatives to support tenants. The size of these relief packages has ranged from AED 100 Million to AED 1 Billion, and included rent-free periods, rent relief, rent deferrals and more flexible payment terms.
Flexibility
As economic and social mobility beings to return to pre-pandemic norms, we are likely to see more flexible leases and greater adoption of turnover rents, which will affect all retail assets, but particularly the Food and Beverage (F&B) sector. Some F&B operators have traditionally required landlord contributions for fit-outs, however going forward landlords across the board may find themselves having to pay significantly more of the bill, particularly in the immediate future.
An alternative model in some large prime locations, is where the landlord funds the retailers fit out in exchange entering into a joint venture with the tenant. Whilst this may not be the case for all landlords, it will offer some a chance to attract and support occupiers or businesses that landlords believe in. This is one of many changes that COVID-19 has accelerated.
Alex Barzycki Associate Director, Property and Asset Management at CBRE commented, “our landlord clients are increasingly asking CBRE for long-term solutions, with the aim of diversifying their portfolios. Some landlords are looking at repurposing vacant retail outlets and strip retail schemes, and replace them with real estate assets such as healthcare, education, or community developments; and more specialist sectors including but not limited fulfillment centers, in order to drive footfall and increase value.
Re-focus
As we enter a period of greater optimism, there will be focus on recovery, and how those assets that have become outdated because of the pandemic can be repositioned or make space for new uses. However, it will not just be the physical stores and shops that will need to change, it is also the immediate environment in which they sit will also have to adapt. More so, with an ever-increasing focus on sustainability and a constant drive to reduce the time-to-market, adaptations of buildings - rather than demolition - becomes both socially as well as economically more acceptable. Therefore, understanding the retail end user is key to thriving in a post-COVID society, ensuring a better co-existence with other asset types and the environment.
CBRE’s approach guides clients in repositioning assets, enhancing their value, uplifting the returns, and extending their useful life. If you would like to know more contact Alex 00971 52 684 3621 or email [email protected]
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Following this lead, developers and mall operators in the retail sector also enacted a range of initiatives to support tenants. The size of these relief packages has ranged from AED 100 Million to AED 1 Billion, and included rent-free periods, rent relief, rent deferrals and more flexible payment terms.
Flexibility
As economic and social mobility beings to return to pre-pandemic norms, we are likely to see more flexible leases and greater adoption of turnover rents, which will affect all retail assets, but particularly the Food and Beverage (F&B) sector. Some F&B operators have traditionally required landlord contributions for fit-outs, however going forward landlords across the board may find themselves having to pay significantly more of the bill, particularly in the immediate future.
An alternative model in some large prime locations, is where the landlord funds the retailers fit out in exchange entering into a joint venture with the tenant. Whilst this may not be the case for all landlords, it will offer some a chance to attract and support occupiers or businesses that landlords believe in. This is one of many changes that COVID-19 has accelerated.
Alex Barzycki Associate Director, Property and Asset Management at CBRE commented, “our landlord clients are increasingly asking CBRE for long-term solutions, with the aim of diversifying their portfolios. Some landlords are looking at repurposing vacant retail outlets and strip retail schemes, and replace them with real estate assets such as healthcare, education, or community developments; and more specialist sectors including but not limited fulfillment centers, in order to drive footfall and increase value.
Re-focus
As we enter a period of greater optimism, there will be focus on recovery, and how those assets that have become outdated because of the pandemic can be repositioned or make space for new uses. However, it will not just be the physical stores and shops that will need to change, it is also the immediate environment in which they sit will also have to adapt. More so, with an ever-increasing focus on sustainability and a constant drive to reduce the time-to-market, adaptations of buildings - rather than demolition - becomes both socially as well as economically more acceptable. Therefore, understanding the retail end user is key to thriving in a post-COVID society, ensuring a better co-existence with other asset types and the environment.
CBRE’s approach guides clients in repositioning assets, enhancing their value, uplifting the returns, and extending their useful life. If you would like to know more contact Alex 00971 52 684 3621 or email [email protected]
Looking for more insights?
Subscribe Here