James Raven is co-founder of commercial property agency Raven Rose, and has been specialising in the retail and leisure market for about 10 years. James has experience working with a vast range of operators, including his involvement in the roll-out of click and collect operator, Doddle. James is especially interested in emerging trends in the industry and how the development of technology is changing the sector. We sat down for a virtual coffee with James to learn a bit more about how demand and supply of retail and leisure property is changing.
Sarah Phillips: Hi James, great to speak with you today. Firstly, could you tell me a bit about Raven Rose?
James Raven: Raven Rose is a partnership with my colleague Josh Rose, who is ex-Soho House group. Josh has a wealth of experience expanding dining brands such as Dirty Burger and Chicken Shop and other brands under the Soho House group. Josh works mainly with our restaurant and leisure clients and I work mainly with the retail clients, following our respective experiences, but we regularly collaborate on joint projects.
At the agency, our clients are a mix of smaller, emerging concepts and large global corporate brands. The newer, rising ones are often the most exciting to us as they tend to do things differently, responding to changes in consumer behaviour. We have both worked client-side which gives us a different perspective and understanding of what our clients’ experiences are like. We do also proactively seek out businesses that are doing things differently and love to be part of their journey.
S: How has your business changed over the past 15 or so months?
J: Of course, we were directly affected by COVID, so we had to be agile and adjust our approach to the acquisition side, which is about 75% of our business. We had to switch our focus to the businesses that were remaining active during that difficult period. Operators in the leisure, gyms, F&B and bars sectors were severely impacted, but grocery operators and home improvement retailers, such as Toolstation, remained resilient alongside opportunistic and well-funded new concepts looking to exploit the influx of supply to the market. We put lots of energy into those clients while also working hard to retain relationships with our other clients that were forced to take a pause, making sure we could help them with things like negotiations with existing landlords.
S: Have you noticed a bounce back over the past few weeks/months as the vaccine rollout continues?
J: Yes, absolutely there is a feeling of cautious optimism in the air! No one knows what will happen, but we do have clients who are now in a position to commit to doing deals, some even embarking on aggressive rollouts. Especially in areas of London that perhaps 6/9 months ago were pretty much on hold - places like Soho, Covent Garden, Marylebone, Mayfair – areas that were not as attractive as the neighbourhoods during the pandemic. A lot of places such as the City cater solely for the working population, but there was no one in the offices, so we’re starting to see a return to what we’re used to; the traditionally prime areas of London being on the radar again.
S: How have you seen demand for space change?
J: Clearly, overall demand for retail space has been restricted and again, the neighbourhoods were more resilient. Demand has been particularly good for properties well-positioned to cater for takeaway and delivery customers. These can be really tricky locations to get into when you’re talking about prosperous London suburbs such as Hampstead or Richmond. At the moment, demand is outstripping supply as there are customers there who want to spend money there and now they can open again, these locations are performing really well. In places like Holborn, Midtown and the City there are quite a few more opportunities available and on top of that, we are in a position now where the moratorium on evictions is still in play, so when that comes to an end (if it does come to an end) there could be a massive influx of tenants who are unable to continue. We don’t really know what the impact of the pandemic is as landlords have been unable to take action on tenants not paying rent.
S: Have you already noticed an influx of space since the pandemic started?
J: Landlords will be aware of the tenants who are not paying rent and perhaps will have identified them as a risk for not being able to pay going forward. We’ve had landlords telling us that they know their current tenants aren’t going to be able to survive and have been asking us to help them to find replacements – those discussions are certainly starting to creep in.
S: Have you seen a difference in the types of units occupiers are looking for?
J: There have been some changes. A good example is Gorillas, who are a grocery delivery business, who use their properties to store and distribute convenience goods to their customers in 10 minutes. On the face of it, warehouses are ideal for their use but due to the amount of units they need to open to make the model work, they will also consider retail properties. As well as being more available, retail properties give them an opportunity to advertise their business. The industrial sector as a whole is performing very, very well; the competition for industrial units is very high, rents are very high. Whereas with retail, there is more availability and greater flexibility on terms that can be agreed. So, I would say that the space that occupiers such as these guys are after could be a good solution to the vacant units left behind by the likes of Topshop and Debenhams, etc. I think the way forward is to encourage new operators to come to the market to repurpose properties which are no longer fit to be used by retailers.
S: Do you think demand for this type of space will increase?
J: It’s very difficult to say. We can look at how Gorillas have performed in Germany, where they are now having to in-fill locations with a 2nd or a 3rd site in certain parts of the city because of the demand. So, at the moment they seem to be performing very well, but I don’t think there are as many competitors in Germany as there are in the UK.
I’m really interested in the different ways we can repurpose retail properties and seeing all these vacant units coming onto the market, we have to start finding ways in which they can be used which reflect the behaviour of consumers. Whether that would be neighbourhood coworking or office space, which is something I’m keeping an eye on – there’s a business called Patch which is doing that. Or even new leisure concepts such as our clients Until, who provide fully fitted health and wellness spaces for personal trainers, therapists, etc. Now there is space in the market at the moment for new operators to come in and look at ways of reinterpreting these large space units but it’ll be about who can execute that in the best possible way.
S: Have you seen any really innovative use of space across the work you’ve been doing in the past few months?
J: Yes, on the F&B side, it’s been interesting to see how businesses have coped with the restrictions, as they haven’t been able to open to the public and they’ve had to come up with different ways to use their real estate. What I quite like is the small hospitality brands who have turned into retail businesses and were able to trade as ‘essential retailers’. A good example is Top Cuvee in Stoke Newington who opened a bricks-and-mortar store just around the corner from Top Cuvee called Shop Cuvee and they were selling deli items, bags and candles etc. I thought that was a really innovative way of staying operational, keeping their name out there in the market and sustaining revenue during the pandemic. Another I really like is vertical farming, brands like Harvest London and In-Farm who are taking spaces and growing fresh produce to supply the hospitality industry. That’s really interesting and I do think there is a big future in that. That’s another great way to repurpose these large retail units.
Delivery is another great one, but you do have to be aware of how opening things such as cloud or dark kitchens impacts local residents in terms of the increased volume of delivery bikes traffic. But in terms of making consumers happy, I would say that’s pretty innovative.
More information on Raven Rose can be found on their website - www.ravenrose.co.