The ease with which some high profile retail and restaurant chains default to a CVA – Company Voluntary Arrangement - in troubled trading times has been much commented on in the property trade press. There is a general lament in the industry that leaving landlords in the lurch is becoming the ‘go-to’ position when a chain is in trouble.
The corporate landlords with big property estates may well be geared enough to take a hit but it shouldn’t be assumed that all landlords with chain occupiers are big players. Some landlords have very modest portfolios and some may be a small, one-off property freehold owner.
Tenants vacating post-CVA often leave their landlords with more than a void. Landlords can get left with the kitchen sink - and much more - to dispose of, which is yet another cost not borne by the defaulting and departing tenant.
The way we live now is forcing a change in our high streets which, in turn, is making some smaller landlords take a fresh view of potential occupiers who are independent traders. Where once a landlord might have sought the reassurance of a 15-year trading history in assessing the strength of covenant of an occupier, in the current climate the business risk may well be assessed on different criteria.
For instance, an independent trader could be investing their life savings into their business or have secured domestic property against a loan and, thereby, is more likely to be focused on making the business work. Independent traders have a passion and an affinity for their particular core business in the way the distant investment fund owners of a chain don’t.
But it’s not only in the heart and soul stakes where independents may score highly with landlords. Small traders are fleet of foot and quick to respond to changing trading conditions and their customers’ needs and desires.
This is never more important than in the restaurant business where modern palates are forever seeking new flavours, tastes and experiences. High Street chain restaurants’ menus are part of a very long, national and international, distribution and logistics chain where supplier contracts and terms are fixed and agreed in boardrooms.
Contrast that with a small, one-off restaurant or café bar who can source seasonal produce and has the flexibility to buy locally and adapt its menu to suit its patrons’ taste buds. If something doesn’t work then it’s off the menu and an alternative quickly takes its place. Independent traders tend to run responsive, lean businesses.
What is playing out presently in the restaurant scene in Peterborough city centre is a good example of landlords willing to take on an independent occupier in a way they might not have ten or even five years ago.
On Bridge Street alone, there’s the quirkily titled Puzzles? micro-bar which offers live music on a small scale and The Lightbox Café Bar with its take on the modern tearoom and coffee culture. The Stoneworks Bar on Church Street offers craft beers, gins and beverages of all kinds. There’s the Bumble Inn micro-pub on Westgate and, later this summer, a brand new vegan restaurant venture with a jazz bar called, intriguingly, When Polly Met Fergie will open in the Westgate Arcade.
Five Lads, a new premium grill-style restaurant serving high-quality chicken and beef, is currently fitting out and due to open shortly on, appropriately enough, Cowgate.
This is on top of existing indie restaurants such as the Pizza Café, The Ostrich pub, The Pizza House, Posh Fish and Chips at the Beehive, and, of course, our very own Michelin-rated Lee Clarke at Prevost.
All of this points towards the kind of entrepreneurial spirit which can make independent traders a good bet for landlords in the current property market.
For more information about retail shops to let in Peterborough and/or restaurant property opportunities, contact Julian Welch at Barker Storey Matthews on 01733 897722.
This article was first published in the Peterborough Telegraph on 10 July 2018: