June 2011: Mike Gilbert from Gilbert Evans has reported that there is growing evidence of an increasing appetite from garden centre operators for leasehold centres. The main driver for this emerging demand is that leased garden centres represent both value and an opportunity to acquire centres for relatively little capital outlay. Two characteristics that offer significant appeal to garden centre operators especially in today’s economy and, in all likelihood, a direct consequence of the changes experienced over the past couple of years in securing funding.
It does not seem that long ago that ‘lease’ was considered a dirty word in garden centre circles and, in fact, there are still some operators who refuse to consider the opportunities that leases offer. One of the organisations who was at the forefront of appreciating the value of leasehold centres was Notcutts when it acquired six garden centres from NWF Retail Holdings back in 2008. More recently, a number of transactions indicate that if a garden centre is looking to expand, then leases are a worthwhile option to consider. Gilbert Evans was recently involved in the sale of Shoots Garden Centres to Squire’s where two of the Shoots sites were leasehold and also advised on the leasing of the Hampshire-based Redfields Garden Centre, a member of the Blue Diamond Group.
Mike Gilbert adds:
“We are definitely seeing more garden centre operators prepared to take leases. Professional advice is always recommended to ensure that leases are properly structured so they are not over-rented and with rent review protection. Leases are still not for everyone. Some groups are adamant they will not consider leases, including many family run independents who prefer the security of owning their own freehold. But if you are a garden centre operator looking to expand without using too much capital, leases are definitely a viable option and well worth consideration”.