The Brexit upside for private dentists By Jonathan Fine. July 13, 2016.
We all awoke on June 24 either very happy or very frightened by the results of the long awaited referendum. Whichever way you voted the result was a stunning surprise that left even poor old BoJo looking gobsmacked for the first time in his life.
Since then there seems to have been a tsunami of uncertainty and change, whatever your politics. The high street consumer has responded; while it remains too early to measure the impact of the referendum on consumer spending patterns, shopping mall footfall after the vote was down 11 per cent on the same period last year.
A survey by market research agency GfK found that 60 per cent of consumers expect the general economic situation to deteriorate over the next 12 months. Expect more profit warnings and sadly more retail collapses.
Last week some of Britain’s biggest property fund managers froze investor withdrawals — including Standard Life, Aviva Investors and Canada Life, while Aberdeen Asset Management brought in a temporary pause and a 17 per cent charge on withdrawals. Legal & General have cut the value of their property fund by 10 per cent. The falling pound and economic uncertainty is particularly forcing foreign investors to run for cover.
So where is the upside for UK private dentists?
We already understand the impact of the web on retail rent values over the last five years, forcing down rents and creating more flexibility in terms of planning — it’s been happening at just at the right time for switched on dentists wanting to relocate from the semi-detached environment to a full retail format with multiple benefits:
- important adjacencies like M&S, Waitrose and Boots
- big footfall
- easy parking
- seven-day trading
Brexit will ultimately force rents down even further — in my view by at least 15 per cent — and when the rates reviews come along they will push rates down significantly; expect a very positive correction.
I can hear you all shouting, “But if the footfall is dropping, surely we would be taking more of a risk going into a retail environment?” No. It’s a temporary hesitation — view it over the life of a 25 year lease, and remember: a great private dental practice with four surgeries in a retail box of 1500sqft in a local neighbourhood shopping environment is going to be a significant disrupter to all the other dental practices in the catchment.
The brave will achieve significant first mover advantages both in terms of operating costs and future growth and asset value.
If you would like to discuss this in more detail or need some help finding a new retail site for your practice please call me on 07860 672727.
“Brexit will force rents down by 15% and will push rates down significantly”
Jonathan Fine, MD