Some say property is a great long term investment – and wonder why so few new shops are being built, despite apparently strong demand in certain locations. Others are worried about the future of our high streets, concerned about issues including ease of parking, and the impact of internet retailing. This salutory tale from the high street in Slough is instructive for both camps.
He tells of a shop unit at 143 High Street, Slough, just two doors along from Marks & Spencer, so in a pretty good spot for passing shoppers, in a pretty average suburban town centre. It was let in 1991 on a 20 year lease at an annual rent of £62,500. Every five years there was a rent review; traditionally rent clauses in leases allow for “upwards only” reviews, and on each occasion – 1996, 2001 and 2006 – there was no market evidence to support a rise.
In 2004, the shop changed hands for £1.43 million – representing an immediate rental return for its buyer of just under 4.5%.
In 2010, with just a year of guaranteed rental income remaining from the current occupier, it sold for £745,000, auctioned on behalf of administrators acting for the property owner. Barnett estimates its current rental value at “not more than £40,000”; that will be established this coming September, when the lease expires.
So, a tale of one shop unit, unloved and unwanted – and worth significantly less than 20 years ago. But here’s the really scary bit, says Barnett: “How many 20 year leases of shops and offices from the early 1990s will soon expire, and the owners – and therefore the banks – will discover the substantial drop in rental value that has taken place.”
Suddenly, the shoe box under the bed looks a very sensible place for your money.
The other day, I hired a Boris bike. It’s been a long-term desire to take advantage of the London cycle hire scheme, but either I’ve been hiking a rather too large bag, or it has been raining, on recent trips to the capital.
Finally, circumstances conspired; I was carrying only a small rucksack, and the showers of earlier in the day had cleared. I left a meeting in Broad Street in the City, and needed to get to Marylebone station for a train out to the west. Obtaining a bike was quick and easy, the credit card operated system was simple, though the machine did spit out a lengthy paper receipt first, before then issuing me with a separate piece of paper providing my dock release code.
The bicycle itself was a big, robust affair, but allowed me to raise the seat plenty high enough for my tall frame; and its three gears were just right for starting off and cruising along. What was surprising was how many other cyclists I was alongside, and how as I moved west across London, how many dedicated cycle lanes and marked roadways there were; and how I regularly kept up with the same vehicles through several junctions.
Compared to the underground, the ride was cheaper, probably healthier, and similarly quick/slow. The only problem, I realised when I arrived at my destination and docked my bicycle, was that in my enthusiasm for keeping up with the traffic, I had been pedalling rather hard, and I needed a shower and a fresh shirt!