2015 Leisure Market Predictions
January 5, 2015
In 2014 The Coffer Group team gave its first insight into what the year ahead held for the leisure market and many of our predictions if we do say so ourselves – turned out to be correct.
General Election years always provide a degree of confusion and, whichever side (or coillition) is elected, there will be a period of uncertainty as the new government establishes itself.
That said it looks set to be another positive year for the leisure sector. So, here are our predictions for 2015 lets see how we do this year.
Rental values and premiums for units requiring late night licences and other statutory consents will increase dramatically, even beyond existing record levels.
Funds will pay premiums for investment property with index-linked growth. Investment yields for leisure related properties of all description – including those with what would have previously been known as poorer covenants (i.e. less substantial companies) – will be very low due to the exceptionally high demand.
Gin will make a big resurgence and more craft producers will emerge.
We expect to see a marked increase in the number of new pub brands that will be rolling out and an expansion of established, well-funded groups. Turnover rents will become more prevalent on the high street and non-estate properties.
Growing importance of the new incantation food courts within shopping centres to act as an anchor to provide an (affordable) shared dining experience often appealing to not just the shopper so bringing a different demographic into the shopping environment.
Increases in labour costs and potential skills shortages will impact restaurant roll-outs – particularly in areas of lower unemployment.
The proposed change to the pub tie will have a dramatic effect on the market one way or another. With more managed pubs, as pub cos follow Enterprise Inns lead, establishing a managed business in preparation for any change in legislation.
Pub rental levels are going to change as the market tries to preempt the calculation for pubs that break the tie and how pub cos will maximise revenue.
A strong year for leisure sector M&A activity, building on the high volume of transactions observed in 2014. Increasing property prices and sharpening yields in affluent towns and cities further afield as well as around proposed transport links – such as HS2 and other developing transport links – as operators and investors seek out more affordable areas and look to secure sites before prices rise.
Shopping centres will look at the wider provision of leisure facilities especially childrens entertainment.
Further swathe of sector sale and leasebacks.
Capitalised values of existing leisure groups wanting exit will increase to pre-crash levels.
Increasing support from banks for all types of transactions in the leisure sector.
The rise of viable delivery companies will ensure restaurant delivery revenues go up while turnover from in-restaurant dining will plateau.
LONDON MARKET PREDICTIONS
The migration by many successful central London operators to more suburban locations will continue, which will lead to increasing rentals and premiums for restaurants but especially bars and pubs in those areas.
Smaller designer hotel operators will flourish and expand in central London.
Rise in the number of casualties within the central London area caused by the downward pressure of funding and increased cost of rents and fit-outs.
Increase in the number of members clubs and workspace clubs – particularly within the technology sector. The push eastwards into new up and coming areas will continue.
London Bridge and the surrounding area will continue to establish itself with the Tate modern extension nearing completion and other cultural markers in SE1.
Malaysian food concepts will flourish.
Further increase in the number of bespoke restaurants, cafés and bars in high-end retail stores.
The number of restaurants that dont accept reservations (queuing) will decline.
More and more hotels will look to outsource it F&B offer.
Increase in finger food restaurants.
Huge growth in healthy eating industry.