Turnover rents – the new norm?

With the announcement today that more than 400 New Look stores will be moving to turnover based rents, it seems that retail sector leases are well and truly set for change. Just one of a number of recent announcements, this one is prominent due to the tenant size and status on the UK high street as well as the number of stores involved. 

In this post Covid world it appears Landlords may be forced to accept that tenants will no longer be willing (or able) to commit to the traditional rack rent structure. Some would argue this change has been on the cards for a while and the pandemic has only sought to expedite matters. Whatever the reason, Landlords are now being forced to review their retail portfolios and consider how best to approach individual lease variations. Each tenant may require a different focus and so for those with larger numbers of tenants, such a review may take some time. In the mean time temporary rent concessions and payment holidays appear to be propping up some of the sector but the shift in towards landlords accepting greater levels of risk on a more permanent basis is something that looks likely to be set to stay.