Market Intelligence and Professional Wisdom

  • 1984 - Gut-feeling is an essential ingredient in the evaluation of research. When I suggested, in the first issue of QC, that the modern concept of professionalism removes initiative, several advisers on motivation and corporate strategy agreed with me. It's what makes sense at the time and you can only draw conclusions from information if you are able to adopt a broad view. It is not the result of research which provides a span of information, but the questions that gut-feelings invite you to ask.
  • 1984 - In my opinion, 1984's Christmas trading period will mark the beginning of the secondary trader's dread of this traditional time. In the past, all shopkeepers used to look forward to the seasonal upturn, but the rot started last year when shoppers spent a fortune in the High Streets and superstores and this year will prove no exception.
  • 1986 March - If landlords and tenants were willing to work together to maximise the profitability of the tenant’s business, then that in turn would maintain the growth of the landlord’s investment.
  • 1987 - I have long held the view that there should be some measurable difference in rental value depending upon the actual time of year in which the review date falls. For example, 25 December is the one time of the year when a tenant is least likely to open a shop. It is accepted that, for purpose of comparison, lease covenants and conditions must be on a like-for-like basis, so presumably this should extend to the valuation date. With the way the seasons are moving round the year, my estimate is that June and September are likely to be the most popular times in which to open shop.
  • 1989 June - I said that the emergence of the 'Green' consumer marked the onset of a major shift in attitude that would have repercussions for all aspects of future retailing.
  • 1998 - Flat demand is caused by addiction to competition.
  • 1998 - As retailers reduce suppliers so, for cost-time-effectiveness, customers use fewer retailers and towns.
  • 1998 - When retailers get carried away and form the wrong impression of reality, the knock-on effect is destabilisation.
  • 1998 - Modelling a business strategy on others and relying on someone else for direction will cloud intuition and generate problems.
  • 2001 - Major multiples are sandwiched between hefty costs and how to attract profitable customers into prime pitches. Information can travel around the world in nanoseconds yet take an eternity to penetrate the few millimetres into the brain: it is not size that matters but quality of spending power. Landlords, thriving on capital value of plc covenant, are cleansing ‘High Street’ of independent retailers. Prime centres throng with impression but, when individual retailers quit or are barred, locations lose character and profitable customers: people whose shopping list excludes expensive parking, congestion, and mixing with all and sundry.
  • 2003 - In a buoyant economy, consumer borrowing, lenders falling over themselves to finance business plans (essentially, short-life, but who cares), shop fit new look, all ideas are thought bees-knees. When demand drops, the tendency is to blame a plausible external reason and occasionally that is correct, but for the most part the real reason is the retailer is not as good as it likes to think. To synchronise with reality is vital: it is no good harping on about last year’s figures or thinking things will get back to normal, because all that matters is now; so if you are not planning and doing something different now to drive business in future, then you will simply repeat the state you are in now, plus the burden of rising costs. To put it another way, if you do what you’ve always done, then you will always get what you’ve always got.
  • 2010 - One reason I suggest not as many tenants want to pay rent monthly as landlords might have thought is cash-flow. You have to have certainty of cash-flow to afford to pay monthly. Quarterly payments enable tenants to save up.
  • 2014 October - On grant of leases, there are two types of landlord. The landlord for whom the property has always been an investment, and the landlord that previously occupied the property for his own business but is selling up and simultaneously granting a new lease of the property to the buyer. Where the lease is being granted in conjunction with sale of the business, it is common for the initial rent to be set by reference to what the business could afford. Where that rent is higher than market rent, it is essential for the wording of the rent review to enable an increase, otherwise all that will happen is that the market rent would prevail. That does not matter if the market rent were higher than the initial rent but, all other factors remaining constant, often it's not. In such cases, the rent currently payable could result in over-renting in the context of the open market rent.
  • 2014 November - The factors that determine prospects for commercial property growth are much more dependent upon specific tenant demand, rather than demand and supply generally.
  • 2014 December - Whether lawyer or surveyor, we professional advisers to landlords and tenants have a dual-role in the field of business tenancies: to help clients to abide by and comply with the law, and where the client has not sought our advice beforehand to find legitimate ways to wriggle out of liabilities and responsibilities.
  • 2017 January - Investors can buy and sell and tenants come and go to their heart’s content but activity counts for little without rental growth. Rental growth in the market for the type of property is fuelled by tenant demand. What tenants want, the suitability of the building, the location, its age and construction, are amongst the deciding factors. What looks good to an investor might not look so good to a tenant. Market heading in another direction is inevitable. The market is dynamic: day-after day, year after year, from subtle variations to discernible shifts to radical structural changes. It can be challenging to remain in sync, let alone keep up. As for anticipating, judicious choice of proposition to begin with is only the start. Unless you monitor your investment’s performance regularly and have some realistic measure for comparison, chances are that you could miss out.
  • 2017 February - The marketing of commercial property investments has become much more shrewd in recent years. For single lots, as distinct from portfolios, the target market is the tsunami of inexperienced investors. With glossy brochures, high quality photos, floor plans, loads of information handing inexperienced buyers answers on a plate such that the proposition becomes convincing, marketeers for sellers know that they are more likely to get away with hiding the reality.

Rent Review Matters - The Michael Lever Newsletter
In 1984, I launched a newsletter, Quarterly Commentary, renamed Current Review, and now Rent Review Matters. Renowned for original thinking, insight and accurate prediction, to read my free on-line newsletter, please click Rent Review Matters.

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Michael Lever