In the second part of a two part article David Stathers continues talking about the relationship between landlords and tenants.
Since joining Boots as a 15-year old, Stathers' career has encompassed running the old Boots picture framing division, a Boots scholarship to Canada where he worked in some of the first out of town shopping centres, major space acquisitions ("I remember one year acquiring 600,000 sq ft of additional sales space!") and on to his current position where he runs the property division of a retailer which serves 92% of the UK population from 1,100 stores (a new Boots store opens, on average, every week). All this has given Boots a footfall second only to the post office but while such statistics might encourage complacence in many, Stathers is keen to look ahead and spot how the worlds of retailing and property will develop as they approach the 21st century.
He is particularly interested in how the shopping centre sector will evolve and is puzzled by the attitudes of some investors and landlords towards their assets. The refurbishment of shopping centres is an area which, he believes, would benefit from a radical rethink of attitudes.
"It's not just a question of refurbishing for the sake of refurbishing. It needs to be done but equally you should look at the environment that the shopping centre now lives in and consider whether you should again be evaluating the criteria which were relevant when the centre was first built."
He points out that when a new scheme is built great attention is paid to the infrastructure that will serve the centre. But when the time comes for refurbishment it is invariably an issue which is overlooked.
"Once a centre is built it seems that some of the considerations that were considered crucial at the time of its inception are then ignored. So instead of spending £50-60m on refurbishing with wall climber lifts, glitz, glass etc, maybe you should do what is essential to maintaining the environment of the centre and at the same time look at the infrastructure and ask: Do we need to do something different?," he says.
As a surveyor, Stathers realises the inherent valuation difficulties involved in spending funds on improvements which do not benefit the fabric of the centre. However, he contends that the industry will have to come up with a solution to these problems if its products - the centres - are to thrive and improve in value. These are issues which are very important and at some stage the valuation method has to come up with answers - that is why the system has to be modernised.
He contrasts the methods employed to re-launch and rejuvenate products in the wider business world with the passive stance of the property industry.
"How long has Coca Cola being going? Boots as a brand was conceived in 1877. Marks & Spencer at about the same time. They're all still going strong but only because they keep evaluating their strategic objectives. Why should it be any different with a shopping centre? There is no reason why, as some people say, a shopping centre is successively a cash cow and then a dog. You have to evaluate where you are in the market and invest accordingly."
"But at the moment the property market is not able to evaluate a product in those terms. And its my biggest fear that this situation will continue."
Stathers does not shy away from stating what he believes are important home truths about the difficulties facing the property industry and he sees a radical change in the way in which the business world perceives property issues.
"Historically property within the average UK company has been confined to property people or farmed out to agents. What is now happening is that the chief executives in these companies are aware of the problems and they're saying things like: What am I doing taking a 25-year lease? and they're saying to their property people this is not acceptable. The last few years has brought property to the attention of the people who really run the businesses," he says.
And this means that developers, landlords, investors, advisers and anyone with an interest in the property business must look to their laurels if success is their goal.
Detailed specific advice should be obtained before taking or refraining from any action as a result of the comments made in this article which are only intended as a brief introduction to the particular subject. Nabarro Nathanson is regulated in the conduct of investment business by the Law Society.
For additional information contact Kevin Wheeler, Nabarro Nathanson, Tel 0171 491 6982.
Since joining Boots as a 15-year old, Stathers' career has encompassed running the old Boots picture framing division, a Boots scholarship to Canada where he worked in some of the first out of town shopping centres, major space acquisitions ("I remember one year acquiring 600,000 sq ft of additional sales space!") and on to his current position where he runs the property division of a retailer which serves 92% of the UK population from 1,100 stores (a new Boots store opens, on average, every week). All this has given Boots a footfall second only to the post office but while such statistics might encourage complacence in many, Stathers is keen to look ahead and spot how the worlds of retailing and property will develop as they approach the 21st century.
He is particularly interested in how the shopping centre sector will evolve and is puzzled by the attitudes of some investors and landlords towards their assets. The refurbishment of shopping centres is an area which, he believes, would benefit from a radical rethink of attitudes.
"It's not just a question of refurbishing for the sake of refurbishing. It needs to be done but equally you should look at the environment that the shopping centre now lives in and consider whether you should again be evaluating the criteria which were relevant when the centre was first built."
He points out that when a new scheme is built great attention is paid to the infrastructure that will serve the centre. But when the time comes for refurbishment it is invariably an issue which is overlooked.
"Once a centre is built it seems that some of the considerations that were considered crucial at the time of its inception are then ignored. So instead of spending £50-60m on refurbishing with wall climber lifts, glitz, glass etc, maybe you should do what is essential to maintaining the environment of the centre and at the same time look at the infrastructure and ask: Do we need to do something different?," he says.
As a surveyor, Stathers realises the inherent valuation difficulties involved in spending funds on improvements which do not benefit the fabric of the centre. However, he contends that the industry will have to come up with a solution to these problems if its products - the centres - are to thrive and improve in value. These are issues which are very important and at some stage the valuation method has to come up with answers - that is why the system has to be modernised.
He contrasts the methods employed to re-launch and rejuvenate products in the wider business world with the passive stance of the property industry.
"How long has Coca Cola being going? Boots as a brand was conceived in 1877. Marks & Spencer at about the same time. They're all still going strong but only because they keep evaluating their strategic objectives. Why should it be any different with a shopping centre? There is no reason why, as some people say, a shopping centre is successively a cash cow and then a dog. You have to evaluate where you are in the market and invest accordingly."
"But at the moment the property market is not able to evaluate a product in those terms. And its my biggest fear that this situation will continue."
Stathers does not shy away from stating what he believes are important home truths about the difficulties facing the property industry and he sees a radical change in the way in which the business world perceives property issues.
"Historically property within the average UK company has been confined to property people or farmed out to agents. What is now happening is that the chief executives in these companies are aware of the problems and they're saying things like: What am I doing taking a 25-year lease? and they're saying to their property people this is not acceptable. The last few years has brought property to the attention of the people who really run the businesses," he says.
And this means that developers, landlords, investors, advisers and anyone with an interest in the property business must look to their laurels if success is their goal.
Detailed specific advice should be obtained before taking or refraining from any action as a result of the comments made in this article which are only intended as a brief introduction to the particular subject. Nabarro Nathanson is regulated in the conduct of investment business by the Law Society.
For additional information contact Kevin Wheeler, Nabarro Nathanson, Tel 0171 491 6982.
