Comment: Retail landlords still need to get real

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I couldn’t help smiling, albeit through clenched teeth, while reading the interview with Hammerson boss David Atkins last week on Retail-week.com.

Not that I found any humour in his assessment that business rates make about as much sense as an Eric Pickles parking scheme, I think that’s a given now, at least to anyone outside the ivory towers of the Treasury.

No, it was the jarring irony that his comments came as part of his revelation of a 9.9% or £140m increase in Hammerson’s net rental, which struck my funny bone, as it encapsulated the inveterate myopia shared by so many in the commercial property industry.

The blurry elephant in the room is of course how those same rent levels, driven inexorably upwards by every commercial landlord in the country for the past 20 years, have led us to the crippling demands now levied in local taxation, pegged as they are to property valuations. Not that Hammerson is the worst offender - my own dealings with the company were fairly positive - but it is still part of the problem.

Oft quoted fables of landlord pragmatism are about as realistic as unicorn tears from what I’ve seen and heard.

Recent intransigence towards companies such as Republic and Dreams suggest that money still talks while common sense takes a stroll round the block to avoid any awkward questions.

Institutional leasing managers remain locked into a regime of asset sweating and, while they continue to be judged on their ability to show valuation increments, there’s little chance of that changing. A bunker mentality prevails amid the firm belief that retailers remain the gift that just keeps on giving. Commercial imperatives trump everything, no matter how many claims are made to loftier ideals.

Rates reform is well overdue, but past experience suggests there’s an equally urgent need for some sort of control over property speculation to prevent rents from simply expanding to fill any ground gained.

Nature abhors a vacuum and, as they have amply demonstrated, landlords will always be ready and willing to Hoover up any spare capacity that may be released into the system.