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Published: 15 October, 2008
The Fat Controller looked down the tracks and wondered what had happened. Then he heard over the radio the tragic news that the Gravy Train had crashed at high speed. The forthcoming months would find the casualties scattered down the sidings.
What we are living through is unique under any circumstances and no one knows how to behave or react. The only certainty is that core fundamentals are more important now than ever.
Over the last three years I have seen shopping centres for sale where rents were to be guaranteed on extensions that had planning permission but weren't built; where financing made no provision for working capital; and where the gearing was so high there was no spare cash for shortfalls.
I could go on but I think you get the flavour. In essence our current problems are all to do with greed and nothing to do with assets. Well located, well run centres with strong cashflow that can withstand occupiers falling by the wayside will be the ones that thrive and survive. And what happens over this Christmas will be telling.
If consumers don't go and spend to cheer themselves up for Christmas, then it's going to be meagre pickings on the retail front. That will then result in an interesting retailing landscape. We have already seen casualties, after all.
And of course as if the workings of the real world did not make it tough enough, Gordon's army of Dick Turpins will be fleecing the beleaguered with full empty rates. Centre owners will have holes in their cashflow and will have to plug service charge shortfalls, all at a time when they need to market more.
The one certainty is that within 10 years no one will have learned their lesson and the Fat Controller will be waving off the patched-up Gravy Train and watching it hurtle headlong to its next crash.
Roger J Southam,
Chairman & Chief Executive, Chainbow,
[http://www.chainbow.co.uk]
