Given the current economic forecast and not forgetting our US friends on the other side of the pond approaching a pivotal election - 2016 will certainly prove to be a crucial year.
The leisure market in London will undoubtedly be in for a very interesting time. The concepts emerging from this sector have never been better and the casual dining market will continue to explode. Having said that, this creative growth brings with it further increases in rents and a looming concern of substantial rates increases for 2017. Both economically and socially, the biggest concern for 2016 is likely to be the threat of terrorism in Central London. We saw that as a consequence of the Paris terrorist attacks, restaurants and bars were down by up to 30% the week following the attacks and the consequences of such an event here, on many levels would be substantial and highly impactful.
Another key issue for 2016 is what happens to premiums. It seems that landlords are making attempts to get rid of premiums. They are doing this in two ways; firstly by increasing rents to levels where premiums are becoming reduced or obsolete. Secondly, by making leases outside the Landlord and Tenant Act, thereby giving operators less certainty in the long term and therefore reducing leasehold value.
At CDG Leisure we really do look at the world from the operator’s mind-set. A world with premiums allows entrepreneurs the option to launch an interesting new concept, with the comfort that if the venture doesn’t perform as anticipated, they have an exit plan with the premium value. This attempt by landlords to eradicate premiums outside the Landlord and Tenant Act strategies, may lead to the downfall of the market, as premiums are actually an indicator of a healthy property market. I fear that 2016 may see premiums be reduced and in some areas eradicated which may give some short-term benefit to both landlords and operators, but in the long-term we see this to be somewhat of a problem. Despite this, good leases in good locations will continue to attract premiums and quite rightly so. Confidence in the London market is clearly high with two restaurants, Park Chinois and Sexy Fish, opening within a few weeks of each other and boasting a combined capital expenditure of over £50 million. It is clear that those with the capital have full confidence in the exciting and variant casual dining sector where London leads the way.
On behalf of the CDG Leisure team and myself, we wish you a successful, healthy and safe year!