Landlords are familiar with percentage rent — taking a portion of retail tenants’ in-store sales — but now, some are thinking of bringing online sales into the mix.
As shopping habits shift towards the digital, some property owners think demanding a portion of online sales is not only fair but might be necessary. However, with little precedent set, it may be difficult, according to the Wall Street Journal.
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The increased interest comes as Covid causes retailers to fall behind on rent, even as their online sales remain steady or increase. Many of their landlords have taken a beating.
Unibail-Rodamco-Westfield and Hammerson, for example, have seen their stock values fall around 80 percent since the start of the year. They now trade at a fraction of net asset value.
“How do you value your assets if they are based on turnover that is constantly going up and down?” Tom Whittington of global real-estate agent Savills told the Journal.
Hammerson will now let U.K. tenants switch to turnover-based leases if they pay an “omnichannel top up.” The company will factor in sales from practices such as click-and-collect — in which shoppers buy goods online, then pick them up in stores — to calculate the amount of rent due. [WSJ] — Sasha Jones