Night Clubs, Bars, Pubs, Restaurants are the highest rental values in the UK, surely this cannot continue?
When clubs, particularly the city centre bars and clubs that are mainly standing venues relying upon the throughput of customers come out of Corvid-19 restrictions they will be operating on a much-reduced capacity, service times, volumes and all of which reflect on profit.
Rents have always been calculated by the landlords’ dependant upon the use of the premises. A simple way of looking at it is that if you had a corner shop with 300 SqFt then you may pay a rent of £2-3,000.00 PA, Business rates would be pro-rata.
Take the same general area and 300 SqFt fully licensed late night bar then you may pay as much as 10 times the rental value dependent upon the area and footfall. The point is that the Landlord is fully aware that the nightclub and bars have a much greater turnover/profit therefore they want their ‘share’!
With the event of Corvid-19 and the closure of bars and clubs and now as we come through this hospitality disaster if you own a bar or nightclub the likelihood is that when you get open you are only looking at around 20% of capacity and turnover due to the likely discussed restrictions on distancing is still in place.
I do not believe that Landlords can still command the same rent as they have prior to Corvid, it is not feasible or even practical for any venue to consider paying such large TEN FOLD rent values for a nightclub any longer – or at least until normality returns and actual turnover increases. They would not get that value of rent for a corner shop or other normal retail site, as the turnover would not permit it.
So Landlords, IF you don’t want to have thousands of empty premises on your books you really need to consider the huge drop that venues have already suffered through no fault of their own and the realistic profits that these venues can generate in the future, at least for the next 2-3 years!
The VOA will also need to readdress the Business rates model that they use, the SqFt business rates are the highest of all rates – again based on previous turnover and profits and the councils wanting their share – IT IS NO LONGER FEASIBLE!