THE head of Yorkshire property investor and developer Town Centre Securities has warned against the launch of a proposed online retail tax, saying the high street must ‘help itself’.
Edward Ziff, chairman and chief executive of the Leeds-based company which owns the Merrion Centre in Leeds, told The Yorkshire Post, such a tax was a only short-term solution and the high street needs to find a way to survive on its own.
Last week, high street minister Jake Berry told MPs in the commons that the Government is considering a “two per cent tax on online retail”.
Chancellor Philip Hammond last year announced a ‘Digital Services Tax’ for the likes of Facebook, Amazon, Apple, Netflix and Google – but the Commons Local Government Committee wants him to go further and consider a specific tax on all online sales to “level the playing field” between online and high street retailers.
Mr Ziff said he was against the move. “I think the high street needs to help itself,” he said.
“Anything that is subsidised can only be assisted in that way temporarily.”
He added: “Yes you can help people but sooner or later, it needs to find its own level and find a new way of operating.”
Five years ago, retail was over 80 per cent of the TCS’s portfolio. Now it’s 52 per cent.
The company has switched to office and residential space and expects the retail ratio to decline further.
Just a third of the Merrion Centre is now made up of shops, Mr Ziff said.
He added that the group was operating in a “challenging environment” but it was coping very well.
It saw eight CVAs or insolvencies across its portfolio in the last year representing 2.5 per cent of the total rent roll. Six of the eight have now been re-let with rents ahead, on average, of previous levels.
“From a trading perspective, Merrion has never been better. In terms of occupational space, whether or not it’s retail, offices, or leisure, we have never had more space occupied than we’ve got now,” Mr Ziff said.
He added: “I think it’s going to be like this for a while but I think retail will start to get better. From a property investment perspective, I’m in absolutely no doubt that it will live again, it’s just a question of where and how.
“Some of the smaller towns that are being punished might not recover, but certainly the major cities, like Leeds, will come again.
“You always have certain retailers who are expanding. In the past it’s been mobile phone shops and coffee shops.
“So whatever that next thing might be, it will come and retail as a property asset class will be in demand again at some stage.”
Landlords are often criticised for being inflexible and failing to do enough to prevent retailers from closing.
However, Mr Ziff believes these days landlords are more inclined to help struggling retailers.
“Before, landlords operated in a silo where you offered the shop, the tenant took the lease and you had five-year upward-only rent reviews.
“Now we’ve got tenants on turnover rents and we’ve got tenants who we have supported in hard times.”
Mr Ziff said that Brexit was having an impact on decision-making generally, but it wasn’t going to make a big difference to TCS. “If you’re a major office owner in London with tenants who are big financial institutions, you might be worried but in our portfolio I don’t see the same.
“But if you’re asking my opinion, Brexit is the worst thing that could ever have happened. I think for the next generation, it’s just tragic.”