Last week, the Royal Institute of Chartered Surveyors revealed average dry rents on new pub leases from the four largest tenanted pub companies had risen sharply, but fallen as a proportion of projected turnover. Simon Chaplin, corporate pubs director at Christie + Co, told the Publican’s Morning Advertiser that pubcos appreciated new operators were increasingly looking to develop food-led businesses and, as a result, were more prepared to release part of the tie, such as wines and spirits, in return for additional rent.
“For the property market, the fact that lease terms will, in future, better match the properties and businesses could be reflected in improving prices and the attractiveness of pubs to potential
purchasers,” he said. “This approach further strengthens the new approach of pubcos, which can only be good for the industry in the longer term.”
The figures on new pub lets from Enterprise, Punch, Marston’s and Star Pub & Bars revealed average rents rose by 12% from £24,368 to £27,255 from Q2 2013 to Q2 2014. However, average projected pub turnover figures were up 15% year-on-year from £296,103 to £339,477 meaning rent as a percentage of projected turnover was down from 8.2% to 8%.
Stephen Taylor, managing director of Guy Simmonds, claimed pub companies were becoming “much more flexible” with their asking rents and terms, and envisaged the buoyant market would continue for the foreseeable future, provided the rent flexibility continues.
“Our viewings for prospective lessees for new pub leases are 20% up in the second quarter of 2014 compared with quarter one,” he said. “However, most in demand for 2014 are privately owned, free-of-tie leases at realistic rents.”
Tom Nichols, managing director at Everard Cole, added pubcos are traditionally good at calculating wet rents but not as adept at dry-led businesses. “This is something they have had to get better at,” he said.
“Hopefully some of the variations [in the report] can be put down to pub companies making a valued judgment on setting a sustainable rent based on fair maintainable trade, as opposed to what can sometimes be optimistic projections.”