UK Land owners are missing out on hundreds of millions of pounds of income from under-utilised space.
Whilst flagship developments are reporting office occupancy over 90%, up to 1/3 rd of their asset space sits idle. Outside space is often overlooked or falls foul of stayed landscaping that quickly ages and does little to engage consumers Commercially external landscapes are too often viewed as problematic and the lesser partner of bricks and mortar.
However, if supported correctly, external streetscapes and pedestrian areas afford land owners far greater flexibility and like-for-like profitability. An over-supply of retail space, slower economic growth and the ongoing uncertainty surrounding Brexit has seen a sharp spike in the number of lease negotiations failing to
complete. By comparison prime outside space can be activated almost instantaneously, with little or no capex and through multiple day parts produce income three times that of comparable inside space.
For land owners to truly benefit from the opportunities outside space affords there needs to be a perceptional shift in traditional asset management. Rotation and micro licensing can replace lengthy leases to offer flexibility and garter adaptability to trends. Decision making should be devolved from central management and Smart Technology be viewed as integrated solution for commerce rather than simply another marketing channel. The concept of rotation has received increased use and support across multiple sectors.
Traders moving from town to town to maximise their audience and sales, returning only when demand dictated. 20 years later the economist Alfred Marshall introduced the concept of price elasticity yet nearly 130 years on the fundamental link between the two is seldom appreciated. Put simply rents have far greater price elasticity when you break down annual, monthly or weekly payments into daily or even hourly slots.
As the absolute amounts being paid are much smaller, breaking a week down into its component day slots allows for a premium to be charged. Creating micro licenses in isolation however is not enough. Without rotation occupancy will slump and the financial benefits diminish.
Mobile vendors are by their nature are more specialist than general retailers and, like the peddlers of old, have their greatest success when they service pent up demand. A triple stacked rare-breed burger maybe delicious and award-winning, but you don’t want it every day. Similarly, the hand-crafted chocolate, the bicycle repair man, manicurist or the shoe shine. Rotation allows vendors to build multiple consumer bases, condensing weekly demand into a single day and then replicate this across multiple locations.
For land owners the benefit is higher occupancy, greater diversity and unlocking the premium that the space allows. The final part of the jigsaw is closing the loop between land owner, vendor and consumer. Rotation without visibility for the consumers fails, as demand is nothing if you miss its supply. Rotation without automation for land owners fails, buried beneath a mountain of paperwork. Finally, rotation without devolving control to those who mine the data quickly breaks down. Space management must evolve and embrace market matching on a micro level, tailor to and flexing with the behaviour patterns of its consumers.
If you are interested in becoming a Land Partner of ours, please do get in touch with us! You will see at the bottom of this page – a few of the forward thinking owners and operators which we are currently working with.