Pub activity increases as private investors and operators capitalise on opportunities
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Kevin Marsh, head of licensed leisure at Savills.
When the lockdown easing measures were announced across the UK there were two things overwhelmingly that people were looking forward to; a haircut and a pint in the pub! And while the pub sector has experienced an incredibly challenging time what we are seeing as restrictions ease is a sector where both operators and investors are keen to explore the opportunities that are hitting the market.
Prior to Covid-19 the sector was in great health and in between the various lockdowns we have seen a surge in demand. As we came out of the most recent lockdown many pubs were fully booked for weeks in advance with some even seeing like for like sales growth when compared to the same period in 2019 before they were even able to start serving customers inside of their premises. While it has been acknowledged there is expected to be some ongoing challenges such as staff shortages and wage inflation, once restrictions are fully withdrawn it is anticipated the pub sector will make a quick and full recovery.
We are already seeing strong trading performance in many suburban and rural locations as a result of a migration of people away from large cities. Enquiries for properties in tourist and coastal locations are at the highest levels in many years due to the continued popularity of staycations which are helping pubs in tourist destinations to perform strongly.
While there’s no denying the sector has had an exceptionally challenging 15 months, and there are bound to be further casualties, Government support mechanisms combined with encouraging trading performance when pubs were allowed to reopen means that some operators are in a strong position coming out of lockdown and are looking to capitalise on opportunities in the market.
Regional operators have been particularly active, with strong rental offers and freehold prices paid for properties that are fully fitted, with large car parks and sizeable gardens or with a space solution – public parking nearby, local community walking distance trade or pavement licence options for instance. Revived Inns, a successful South East pub operator established in 2016 recently expanded its portfolio of seven pubs by taking a new lease on The Farm at Friday Street in Eastbourne and Elite Pubs agreed a letting of village pub The Mark Cross Inn near Crowborough. In both of these instances the original tenant had gone into administration but the properties were quickly let to these well-run and growing regional operators.
The demand on the occupier side is matched by investors, particularly high-net-worth and family offices who are filling the gap from larger funds and property companies who have been less active. Where there has been activity it has generally been driven by fundamentals – was it a great property prior to the pandemic and is there anything that will prevent it from getting back to what it was once the restrictions are fully lifted? However, we haven’t seen a lot of stock in the market, partly due to the concern by vendors that now might not be the right time to sell but in a market where there is no shortage of buyers and a lack of stock we are seeing pricing which is close to pre-Covid levels for certain assets. We have also seen properties that failed to sell prior to the first lockdown now being snapped up by some of the more acquisitive buyers which is a hugely encouraging sign.
We expect further opportunities to arise in the coming months and as the restrictions should continue to ease we think the strong demand that we are seeing from both operators and investors will only continue to increase in what should be a very active and exciting market place.
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City Pub Group buys Roundhouse freehold for £1.1m
The City Pub Group has revealed its tentative steps with expanding its portfolio after the pandemic.
The group bought the freehold of the Roundhouse in Wandsworth Common, south London for a total consideration of £1.1m, as it had four years left on the lease.
The group has been readying itself to expand to up to 100 sites and looking at “large market towns in southern England and Wales", CEO Clive Watson told The Morning Advertiser earlier this year.
Trading at the group’s reopened sites has neared 2019 levels, with Watson describing the business as “cash generative and trading profitably.
He added: ‘’We have been very encouraged by how we have traded since reopening despite the continuing restrictions.
“I would like to thank personally all our staff and suppliers for their ongoing commitment. We have put in place a strong platform for growth, and we believe that when we are allowed to trade restriction free we will build to levels higher than 2019."
Euros rebrand for London pub
Pub giant Greene King chose to rebrand one of its capital city sites in the run up to yesterday’s England v Germany match in the UEFA Euro 2020 football tournament.
The Torch pub in Wembley was renamed Southgate’s Revenge, in tribute to the 1996 Wembley penalty shootout, which saw Germany emerge victorious against England.
Punters could also buy a pint of Southgate Revenge at the site during the game yesterday (29 June), in which England beat Germany 2-0.
Speaking before the match, Cvetelina Metanova, general manager at the pub, said: “Being located in the heart of Wembley, we couldn’t be more excited to have such a landmark game happening right on our doorstep. That’s why we wanted to really celebrate and rally support being the team and Gareth Southgate by doing a special pub takeover in his honor.
“The atmosphere here at the pub on game day is always incredible when England are playing and tonight will be no exception!”
Peaky Blinders pub to receive £750k refurb
A pair of operators in the Midlands are set to open their second live music site in Birmingham with Star Pubs & Bars.
Nick Rendall and Trevean Anderson have taken on the Rainbow in Digbeth, which is known for its connections to the original Peaky Blinders in the 1890s.
The site has been closed for four years but will be treated to a £750,000 joint refurbishment to turn it into a live entertainment driven events venue.
The refurbishment will include the creation of a bar and dance space in the basement with a raised stage for live music.
A cocktail bar and lounge will be created on the ground floor with a Victorian aesthetic while an outside courtyard garden will be transformed to include 96 covers.
The pair already run The Cuban Embassy in Moseley with Star and plan to reopen the Rainbow once remaining Covid restrictions are lifted.
Five Points open new taproom
The Five Points Brewing Company has opened the doors of a new outdoor taproom in the heart of Hackney.
The East London brewery is also readying itself to open a new indoor taproom this September following a successful crowdfunding project.
The brewery hit their initial target of £350,000 within seven days earlier this year and is planning to launch visitor tours and guided beer tastings.
Beer lovers can also enjoy pizzas from a pop-up at the space called ACE Under The Arches, in collaboration with ACE Pizza.
Five Points co-founder, Ed Mason said: “We love ACE Pizza, and we love their attention to detail. Their 48-hour cold fermented dough makes for a delicious pizza crust, and their flavours and ingredients combinations are incredible.
"Having worked with them at our pub the Pembury Tavern, they were our first choice when it came to inviting a food brand to join us at our new open-air Hackney taproom this summer.”
Business rates holiday ending
Full business rates will return from Thursday 1 July after a 15-month exemption period amid the pandemic.
However, rates will not go back up to the standard rates but will be reduced by about two thirds (67%) up to £2m for closed businesses with a lower cap for those who have been able to reopen. The reduced rate will be in place for nine months.
Real estate adviser Altus Group analysed Government data and found almost 20% of the 1,987,737 properties liable for business rates had received the holiday (with 727,413 exempt from rates through 100% small business rates relief) – saving firms £13.8bn in rates.
However from 1 July, the discounted rate is expected to cost the Treasury a further £3.3bn – taking the total cost of relief to £17.1bn.
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