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Shaftesbury is counting on a return of office workers to boost the value of its West End portfolio as a resurgence in tourist visitors begins to drive activity at weekends.
The landlord said valuations fell by a tenth, or £291m, in the six months to March as rent deferrals took their toll.
Shaftesbury, which owns 16 acres in Soho, Chinatown and Covent Garden, said it expected office workers to return to central London in greater numbers from next month.
London has lagged other regions, with a Centre for Cities report finding worker footfall was still only 15pc of normal levels at the end of July.
Shoppers have already started to return to the West End, with retailers in its properties reporting improved trade, particularly at weekends.
Weekly footfall is now between 50pc and 60pc of pre-pandemic levels, Shaftesbury said.
Its hospitality and leisure tenants, which account for 40pc of its portfolio, continued to enjoy a strong recovery in trading, boosted by initiatives such as outdoor dining in the Westminster and Camden council areas.
However, the company noted: "For all hospitality businesses, staffing issues remain, until recently exacerbated by periods of self-isolation following 'track and trace' notifications, which in some cases have resulted in temporary closures."
Brian Bickell, Shaftesbury’s chief executive, said autumn would prove to be a critical period for its tenants.
“The momentum of the last four months is providing a sound platform for the continuing revival of the West End in the important months ahead, leading up to Christmas and into the new year, and the prospects for a return to pre-pandemic patterns of life and activity,” he said.
Mr Bickell had declared at the height of the pandemic that the traditional leasing model was falling apart, as turnover-linked rents have become increasingly popular among struggling tenants.
Matthew Saperia, an analyst at Peel Hunt, said that Shaftesbury’s soft approach to tenants had kept vacancy rates low across its portfolio compared with some of its peers.
He said: “Shaftesbury has publicly stated that the old [lease] model is broken and they will provide a more equitable agreement between landlord and tenant.”
“If I was a retailer or in the leisure business I would be licking my lips: it’s a great opportunity to get space in a competitive area with more favourable terms with my landlord.”
Shaftesbury said vacancy rates had fallen from 8.4pc in March to 4.1pc by mid-August, but were still considerably higher than the pre-pandemic rate of about 1pc.
It collected 51pc of contracted rent in the three months to June 30, up from 40pc between January and March. It said leases "generally remain shorter" and included some element of turnover-based rent in most cases.
The company reported healthy interest for its shops, including online retailers looking for bricks and mortar space as consumers return to stores following months of internet shopping in lockdowns.
Shaftesbury is also reconfiguring some larger shops to meet rising demand from brands for smaller, more affordable spaces.
Shares rose almost 1pc to 627p in afternoon trading, valuing the company at £2.4bn. The shares started the year at 502p a year ago.