RETAIL LANDLORD ORGANIZATIONS GLOBAL BENCHMARKING — FACILITY MANAGEMENT
Evbex Research is undertaking a major review of the Landlord Retail Industry. During a year in which the retail industry has suffered significantly from initially, the pressures of internet shopping and now Covid-19, retail organizations are facing an uncertain future with several UK chains already experiencing catastrophic outcomes. The phenomenon of internet shopping and the effects of Covid-19 are not however unique to the UK, they have Global Benchmarking implications and affect every country in the world.
Evbex is extending its research in the UK by reaching out to global benchmarking partners to find innovative solutions to the issues and threats facing the retail sector. In particular, this review focuses on the plight of landlord organizations responsible for shopping malls/centers and retail outlets from a service charge and facilities management perspective.
Global Benchmarking
The Challenge & The Approach
The review includes the challenges faced by the retail sector and specifically for landlord organizations shopping malls/centres and out of town retail outlet centres. The research is focused on the relationships between the landlord (owner of the developments) and the retailers and attempts to find solutions to the current challenges brought on by increasing online shopping. Also by the restrictions imposed by Covid-19 governmental guidance and rules impacting on the free movement of people and the temporary closure of shopping malls/centres and retail outlets. Outcomes include retailers unable to pay landlord service charges and the knock-on effect to landlord organizations caused by this.
In the UK, the retail landlord charges retail tenants a ‘service charge’ on top of the rental charge. The service charge usually aligns with the Royal Institute of Chartered Surveyors (RICS) Service Charge Guide and covers 1) Management Fee; 2) Facilities Management Services (Hard and Soft); 3) Utility Costs; 4) Insurances; and 5) Extraneous Charges (Refurbishments etc.). It is usual practice to align with the RICS Service Charge Guide to enable transparency and ease of audit, amongst other reasons.
Whilst this approach is the accepted current practice in the UK market, pressures are mounting to offer greater value through increased collaboration and innovative approaches between landlord and tenant retail organizations.
Evbex is working with major retail landlord organizations in the UK to initially benchmark service charge costs and through this exercise exploring innovative ways in which the retail sector may raise to the serious challenges it currently faces. It is considered that this could be achieved through greater collaboration amongst peer retail organisations in sharing valuable benchmarking data to enable key decisions to be made. Approaches and practices from global benchmarking retail organizations will also inform the vision and opportunities for how a prosperous tomorrow may look like for the retail sector.
Outcomes may include re-purposing some of the areas within existing developments for more mixed-use developments and creating communities within developments such as the introduction of increased eating areas, community usage, part conversion to hotels, offices, residential etc. Another objective will be to examine the facilities management approaches and challenges within such developments so that it benefits all concerned.
We seek to collaborate with major retail landlord organizations across the globe through a) understanding the service charge cost base; and b) through knowledge sharing and understanding of successful outcomes, ensuring that a thriving retail sector will exist for a long time to come.
Please complete the attached benchmarking form for as many schemes as possible and return to Richard Davies (MD of Evbex) on richard.davies@evbex.com. A copy of the final report will be shared with collaborating organizations.
