Real estate lawyer at Hewitsons Alexandra Messham asks can short-term lettings provide hope for the retail sector and are pop-ups, aka the “Airbnb of the retail world”, the way forward?

UK shopping habits are changing, as Brits adapt their lifestyles to accommodate COVID-19 restrictions.

The challenges facing the retail sector before the onslaught of the pandemic were real enough without being forced to close under government guidelines and embrace the ‘new normal’. Indeed, the volume of retail sales in April 2020 fell by a record 18.1%, following the strong month fall of 5.2% in March.

Whilst Kantar reported bumper figures for take-home sales, the overall picture for some grocers will be less positive, as supermarkets continue to feel the impact of a considerable reduction in on-the-go spend on meals, drinks and snacks.

Co-operation between landlords and tenants has been encouraged and some were able to agree rent deferral and/or rent reduction arrangements during lockdown in the hope that they can ride out the storm and return to some sort of normality in the future.

However, with a little creativity and cooperation there are alternative arrangements for landlords and tenants to consider, one of which is the short-term letting or pop-up shop.

The pop-up shop allows landlords the ability to generate some return from potentially vacant premises whilst also creating an opportunity for innovative start-ups in the sector.

According to data analysis carried out by Euclid, two-thirds of millennials still shop in store on a weekly basis and then purchase in a ‘channel-agnostic’ way, favouring a mixture of in-store and online experiences.

They place significant importance on an initial immersive experience with a product before proceeding to purchase online. This shows a continuing place in retail for a shop front.

There are several online platforms providing a ‘match making’ service for retailers seeking short term shop space and are being described as the “Airbnb equivalent for the retail market”.

The arrangements generate income for landlords in the interim and allow retailers to launch their brand cautiously before committing to something more long term for the future. Strangely, the pandemic could have provided an opportunity for a new breed of entrepreneur.

A word of caution, in order to ensure that both landlords and tenants achieve what is intended with these arrangements they must be fully aware of the potential risks involved and ensure they seek appropriate advice and legally enforceable agreements.

The law of England and Wales as regards commercial premises occupation is complex with well-defined rules on the rights and remedies of landlords and tenants. It is not rocket science, but inadvertent mistakes can dramatically change the position of the parties as regards their rights and their commercial bargaining position.

Whilst these arrangements may present a viable and attractive short-term solution to the high street’s woes, the importance of ensuring the parties intentions are embodied in a written and iron clad agreement cannot be overstated.

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