The Rent Review Specialist
Shop Investment
Assessing Covenant Strength
09/09/2016
Assuming a commercial property is let already, the proposition an income-producing investment, the investor would be buying the building/property, not the tenant’s business. Since the…For further reading, please visit LandlordZone.
ITZA revisited
18/05/2016
I am revisiting ITZA in the light of an experience I am enduring concerning some tenants that are inexperienced of rent review. Tenant contention is that an ITZA adopted/agreed for a previous review should be used again for a current review. For further reading, please visit LandlordZone
Retail Property Investment Valuation
02/10/2015
Valuation is an opinion, Not merely anyone’s opinion, but an informed opinion; an opinion based on a knowledge of the subject.
The starting point… For further reading, please visit LandlordZone
The starting point… For further reading, please visit LandlordZone
How to Appraise a Shop Investment
02/06/2014
The short answer to how to appraise a shop investment is that everything about the proposition is reflected in the level of Zone A rent. For further reading, please visit LandlordZone
Shop Investment
29/05/2013
I have resisted commenting on the Portas review of the ‘High Street’ and ensuing media and industry reports, because …for further reading, please visit LandlordZone newsletter issue 12 - click here
Recession: a time for transformation
01/06/2009
As I say time and again, essentially, a problem is a fault in direction which, when left to its own devices, may fragment into seemingly different problems, so as to attract attention. It is not enough to resolve a problem: it must be transformed. Finding a solution simply dilutes the problem, until it is bearable. It is not enough to alter perception: when symptoms are merely relieved, the problem will crop up again.
Transformation is a thorough, possibly dramatic, change in underlying attitude. In my healing experience, such as it is, few people are adept at transforming problems into commercial opportunities as they go. Mostly, people metaphorically brush problems under the carpet, ignore them and hope they’ll go away. They don’t. The problem waits for an opportunity to arise again, often in different guises. When you have an unresolved problem, you will not progress. You, your business, are stuck.
A problem at micro-level becomes a macro large-scale. In CR (QC06) December 1985, I said “Costs in the property industry have reached record levels. The actual amount of money involved in day-to-day transactions imposes constant pressure to meet critical financial targets. Any attempt to question or stop is met by a barrage of vested interests intent upon maintaining momentum. The cost of error is rapidly reaching the point whereby individual foresight will be crushed by the weight of uncontrollable dynamism. In the prime shop market, the corporate income of some retailers is inextricably bound up with the consumer’s willingness to keep on spending on credit. It only needs a few months’ lull for the structure to crack under the weight of operating costs. ”
And in CR50, June 1998, “When retailers get carried away and form the wrong impression of reality, the knock-on effect is destabilisation. Flat demand is caused by an addiction to competition. ”
Generally, retailers don’t care where the money comes from. As long as it does. As long as the business plan is approved by the bank and facilities can be renewed, as long as customers can be persuaded to spend more, as long as the lust for more shops can be satisfied, as long as landlords can be dumped or treated like any other supplier, that’s all that matters. Operating in splendid isolation, indifference to the wider long-term consequences cannot be appeased by giving to charity: playing power-games, bullying tactics, is completely the wrong approach for long-term consistent success.
Not only retailers, but also landlords and surveyors have fallen down the slippery slope. Indifference to repercussions of pro-active asset management, over-developing, over-estimating values, manipulating rents, it all fuels the get-rich-quick mentality, and the greed has so rotted the core that they’re going cap in hand to shareholders and banks for more money to feed the cravings.
It’s not the market’s fault. That is akin to admonishing customers, the source of spending-power. It’s not that the market suddenly turned, or no one could have foreseen. The direction had been changing for years. It merely needed to tip the balance. It was foreseen, but warnings went unheeded. Views like mine are not what most people want to hear. In December 1985, I said “success in retailing today is too dependent upon the availability of credit. Credit enables retailers to control the concept of what represents value for money. “ As I said in June 1998, “the cost of prejudice: a preference for conformity. It is thinking problems are normal. “
Credit interferes with the law of balance. It increases the money-supply artificially. You cannot blow something out of all proportion and expect it to stay there. A time must arrive when it bursts, a point at which it is so fed up it cannot contain itself. In my opinion, the bubble was about to burst in mid-2004, but greed gave it a final blow. In April 2008, as I put in my blog “in my opinion, the sub-prime crisis was deliberately orchestrated by some very shrewd operators who have made trillions of $ or whatever out of the debacle. ” Be that as it may, the credit-crunch has highlighted just how much pretentiousness exists.
Credit creates its own vicious circle of spiralling costs. Artificial growth, opening more shops, for than fair share, gives an impression of strong demand, thereby attracting competitors, which in turn increases pressure for performance. The terms of a loan can restrict the freedom to synchronise with reality: the direction in which customers are going. Businesses and properties exist to serve customers: not the other way round.
Borrowing is considered par for the course, but whereas it is okay to want a helping hand to begin with, there comes a point surely, when a business ought to stand on its own feet? In my opinion, for a business to consider itself successful it should have no need of debt. That is not to say it should not have any borrowing facility, simply it should rarely need to use it. The credit crunch shows just how much businesses that depend on borrowing have become a drag. In the aftermath of years of a booming economy, that few businesses have amassed cash confirms most directors are more interested in lining their own pockets and “living the life of Riley” than ploughing the profits into the business.
The money has to come from somewhere. To live off borrowings, assuming they would always be replenished on the strength of the business plan, is the result of allowing the art of avoiding challenging questions to run companies. It is a wonder of the pyramid, whereby the person in charge surrounds themselves with layers of management, so as to create the illusion that person must be very talented. Not realising the light at the end of the tunnel could be the train coming towards you can lead to a series of mistakes that start when someone is sold on an idea and there is no stopping them. By the time the idea is up and running, it is failing all over the place and costing a packet.
I think it’s sad, not to mention a waste of resources, that retailers and landlords are obliged to fail, and for shareholders to suffer, before directors will learn how to listen. Perhaps it’s hardly surprising: their contemporaries are on the same wavelength: standing firm and resolute on a massive psychological block A clean-sweep is necessary: to remove from positions of power those that need tangible evidence before they’ll act.
Fact is when you ignore the signs and don’t change willingly, change will be forced upon you. It’s as simple as that.
For long-term consistent success, to be progressive, to avoid coming unstuck in times of change, you have to think deeply and not allow superficial influences to cloud your judgement. As I say on my web site, “I think it important to have a feel for what you do, because then you can find your way around in the dark”. It is clear to me what is happening. It’s a shift, to living true to form and allowing business development to unfold naturally. In other words, “This above all: To thine own self be true, And it must follow, as the night the day, Thou canst not then be false to any man. “ - William Shakespeare, (1564-1616)
Transformation is a thorough, possibly dramatic, change in underlying attitude. In my healing experience, such as it is, few people are adept at transforming problems into commercial opportunities as they go. Mostly, people metaphorically brush problems under the carpet, ignore them and hope they’ll go away. They don’t. The problem waits for an opportunity to arise again, often in different guises. When you have an unresolved problem, you will not progress. You, your business, are stuck.
A problem at micro-level becomes a macro large-scale. In CR (QC06) December 1985, I said “Costs in the property industry have reached record levels. The actual amount of money involved in day-to-day transactions imposes constant pressure to meet critical financial targets. Any attempt to question or stop is met by a barrage of vested interests intent upon maintaining momentum. The cost of error is rapidly reaching the point whereby individual foresight will be crushed by the weight of uncontrollable dynamism. In the prime shop market, the corporate income of some retailers is inextricably bound up with the consumer’s willingness to keep on spending on credit. It only needs a few months’ lull for the structure to crack under the weight of operating costs. ”
And in CR50, June 1998, “When retailers get carried away and form the wrong impression of reality, the knock-on effect is destabilisation. Flat demand is caused by an addiction to competition. ”
Generally, retailers don’t care where the money comes from. As long as it does. As long as the business plan is approved by the bank and facilities can be renewed, as long as customers can be persuaded to spend more, as long as the lust for more shops can be satisfied, as long as landlords can be dumped or treated like any other supplier, that’s all that matters. Operating in splendid isolation, indifference to the wider long-term consequences cannot be appeased by giving to charity: playing power-games, bullying tactics, is completely the wrong approach for long-term consistent success.
Not only retailers, but also landlords and surveyors have fallen down the slippery slope. Indifference to repercussions of pro-active asset management, over-developing, over-estimating values, manipulating rents, it all fuels the get-rich-quick mentality, and the greed has so rotted the core that they’re going cap in hand to shareholders and banks for more money to feed the cravings.
It’s not the market’s fault. That is akin to admonishing customers, the source of spending-power. It’s not that the market suddenly turned, or no one could have foreseen. The direction had been changing for years. It merely needed to tip the balance. It was foreseen, but warnings went unheeded. Views like mine are not what most people want to hear. In December 1985, I said “success in retailing today is too dependent upon the availability of credit. Credit enables retailers to control the concept of what represents value for money. “ As I said in June 1998, “the cost of prejudice: a preference for conformity. It is thinking problems are normal. “
Credit interferes with the law of balance. It increases the money-supply artificially. You cannot blow something out of all proportion and expect it to stay there. A time must arrive when it bursts, a point at which it is so fed up it cannot contain itself. In my opinion, the bubble was about to burst in mid-2004, but greed gave it a final blow. In April 2008, as I put in my blog “in my opinion, the sub-prime crisis was deliberately orchestrated by some very shrewd operators who have made trillions of $ or whatever out of the debacle. ” Be that as it may, the credit-crunch has highlighted just how much pretentiousness exists.
Credit creates its own vicious circle of spiralling costs. Artificial growth, opening more shops, for than fair share, gives an impression of strong demand, thereby attracting competitors, which in turn increases pressure for performance. The terms of a loan can restrict the freedom to synchronise with reality: the direction in which customers are going. Businesses and properties exist to serve customers: not the other way round.
Borrowing is considered par for the course, but whereas it is okay to want a helping hand to begin with, there comes a point surely, when a business ought to stand on its own feet? In my opinion, for a business to consider itself successful it should have no need of debt. That is not to say it should not have any borrowing facility, simply it should rarely need to use it. The credit crunch shows just how much businesses that depend on borrowing have become a drag. In the aftermath of years of a booming economy, that few businesses have amassed cash confirms most directors are more interested in lining their own pockets and “living the life of Riley” than ploughing the profits into the business.
The money has to come from somewhere. To live off borrowings, assuming they would always be replenished on the strength of the business plan, is the result of allowing the art of avoiding challenging questions to run companies. It is a wonder of the pyramid, whereby the person in charge surrounds themselves with layers of management, so as to create the illusion that person must be very talented. Not realising the light at the end of the tunnel could be the train coming towards you can lead to a series of mistakes that start when someone is sold on an idea and there is no stopping them. By the time the idea is up and running, it is failing all over the place and costing a packet.
I think it’s sad, not to mention a waste of resources, that retailers and landlords are obliged to fail, and for shareholders to suffer, before directors will learn how to listen. Perhaps it’s hardly surprising: their contemporaries are on the same wavelength: standing firm and resolute on a massive psychological block A clean-sweep is necessary: to remove from positions of power those that need tangible evidence before they’ll act.
Fact is when you ignore the signs and don’t change willingly, change will be forced upon you. It’s as simple as that.
For long-term consistent success, to be progressive, to avoid coming unstuck in times of change, you have to think deeply and not allow superficial influences to cloud your judgement. As I say on my web site, “I think it important to have a feel for what you do, because then you can find your way around in the dark”. It is clear to me what is happening. It’s a shift, to living true to form and allowing business development to unfold naturally. In other words, “This above all: To thine own self be true, And it must follow, as the night the day, Thou canst not then be false to any man. “ - William Shakespeare, (1564-1616)