The phrase “Covid has been an accelerant” is close to becoming overused, but it really has. Trends that had started to appear in our working, shopping and living patterns over the past few years have been supercharged during the pandemic. That should have meant that we were largely prepared for them, but in the real estate world, where efficient use of data and technology is still in its infancy, not everyone was.
But that doesn’t mean that they can’t be going forward. Or at least, that is what the always optimistic Ross Bailey, founder of Appear Here, and his lead data scientist Alex Nussbacher believe.
“The big question for us was, was Covid something that fundamentally changed views during this crisis or was it something that accelerated?” says Bailey.
The answer was acceleration. Bailey says the Appear Here platform had started revealing the importance of neighbourhood and independent retailing 18 months prior to 2020.
Data from its platform was showing a desire for butchers, fishmongers and local retail long before Covid forced us to appreciate our communities more. It also reveals a number of other trends that landlords can use to help navigate retail back to a path of growth, key among them the need for flexibility, in lease length and in pricing.
“One of the things that really comes out from brands is that when you ask them what’s most important for them to take a shop, it’s the ability to either have a short-term lease or to be able to extend it, to have that flexibility,” says Nussbacher. “Because there’s so much uncertainty coming out of all of this, what they really want is a landlord who’s a partner in navigating that, who can help them find success rather than just do a transaction.”
Be that partner
Being that partner, rather than a transactional landlord, says Nussbacher requires a technology-focused, adaptable and agile way of thinking. And he wants to see more landlords embrace that, enabling them to move faster and smarter to ensure that retail continues to have a future.
“The first thing is to not be afraid of technology,” he says, “and really realise that whatever you’re trying to do, the technology is really there as a tool to hopefully execute some bigger vision. Even as a data scientist, I don’t want the data science to be the only piece of it. I want it to fit into something else. But once you get that fluency with technology, you can really use it not only to go faster, but to have a deeper relationship with your tenants and help them be more successful.”
Bailey wants the real estate industry to forget about how it used to operate and focus on the future. His motto for 2021 is: “The secret of change is not about fighting the old but building the new.”
“For the real estate industry, it’s less for me about being agile, but more about focus and how much of it is on building the new and how much is it fighting the old. Whenever we find ourselves saying, ‘well, this is the way it’s done’ and you find that being the excuse or reason for not making a decision, I think we should instantly be saying, ‘well, why?’”
A superior replacement for covenant
He points to the reliance on covenant and how in “the old” covenant was all about security of income. But covenant – those old anchor tenants of Debenhams, House of Fraser and the Arcadia brands – has proven to be not quite so secure these days.
Bailey believes data is a superior replacement for covenant, that great data can give owners the predictability of income they need much better than covenant can.
“It’s about not just trusting the rules of the game because they’re the rules of the game,” says Bailey, “but embracing those different opinions and these different ideas and trialling it, playing with it.”
His goal is for this decade not to be defined by Covid or fighting the old, but by resetting, rebuilding and the new.
“Retail is going through a cumulative compounded effect in quick succession of all of these different things, whether it’s e-commerce, whether it’s around location, whether it’s lease lengths, whether it’s vacancies, whether it’s to do with what’s happened with Covid and cities shutting down – all of these things have hit the industry in one go. And the positive of that, as difficult as it will be, is that it puts us all on a page to reset and rebuild,” says Bailey. “And I think if people have the energy to focus on tomorrow rather than romanticise the past, it can be the most exciting time ever for this industry.”
To send feedback, e-mail samantha.mcclary@egi.co.uk or tweet @samanthamcclary or @estatesgazette
