Retail and leisure

Strategic report

Property performance Retail and leisure

Retail and leisure income totalled £14.1 million, a decrease of £6.4 million, and represents 10.7% by income and 9.6% by value of the total property portfolio. The rental performance of our Retail and leisure portfolio plummeted by 31.2% and the like-for-like valuation has fallen by 27.7%. The performance of our portfolio has traditionally been resilient, bucking the national trend where conventional shops have closed as consumers have increasingly moved online. The pandemic has accelerated this trend, as overnight retailers were forced to close with all non-essential purchases moved online. The stop-start nature of the subsequent lockdowns, alongside the general decline in footfall on the high street and social distancing guidelines, has also made it extremely difficult for retailers to generate anywhere near the same pre-pandemic turnover at any point during the year.

A large focus this year has been working with our retailers to assist them through this difficult and uncertain period. As the first lockdown was announced, we contacted all of our retailers to offer support during that initial period of uncertainty. This direct, open book approach meant that conversations were started early with many retailers allowing their businesses to plan as far as possible and ensure that the challenge was shared. This approach ultimately served us well as the pandemic lasted longer than anticipated. Initiatives during the year included moving some food and beverage retailers to turnover based rents and a timed closure of Marylebone Lane to assist with outdoor seating arrangements for restaurants. Support was offered on a case-by-case basis to the businesses most badly affected, where rent concessions and payment plans were provided, but with limited deferment arrangements.

Despite these initiatives, we experienced our share of fallout from the impact of the pandemic on retailers. Eileen Fisher, the American womenswear designer, exited the UK resulting in the closure of their Marylebone High Street store. The year also saw the closure of established retailers on the High Street, including LK Bennett and Boots, whilst The Natural Kitchen, a deli and restaurant, entered administration.

Nevertheless, our stores on Marylebone High Street have continued to attract strong occupier demand. This was reflected by lettings and store openings to established fashion and eyewear brands Tiger of Sweden and Ace & Tate. In addition, we were also able to attract a range of new operators to open stores including The Organic Pharmacy, The Italians (wine and deli shop), EVOKE (craft shop) and Home Marylebone (bar and restaurant). This strong demand for space in Marylebone Village saw the opening of an Ottolenghi deli on 1 July on Marylebone Lane.

We will monitor our support for retail and hospitality operators and residents as they recover from the effects of the pandemic. We understand that although the Retail and leisure portfolio is the smallest of our four core property sectors, it is the most accessible and visible, providing the thriving environment that positively influences a decision to live or locate a business in Marylebone.

The Italians, 27b Devonshire Street

Blandford Comptoir, 1 Blandford Street Tiger of Sweden, 86 Marylebone High Street