Stuck between an office and a shop is an unenviable position for any commercial landlord. Retailers are the most immovable of the two, said British Land in an update on Tuesday. It has received only 71 per cent of its retail rents for its June quarter to date. Despite the worry over the future of offices, almost all those tenants paid on time.

That may only reveal just how far the process of rationalising office space has to go. Similar to the impact on retail rents from the shift to online shopping, any effect on offices may take years. This uncertainty manifests itself in British Land’s steep 25 per cent share price discount to its book value. Investors understandably worry about the future of any lower quality properties that have leases up for renewal over the next five years.

Lex: British Land

New chief executive Simon Carter wants to soften the blow to investors. Asset sales reflect his sober outlook. British Land sold about £1.2bn of assets last financial year, most of that in December split equally between offices and retail. Achieving a 6 per cent premium to book value on these sales shows the demand for blue-chip properties with long leases.

Carter casts a hopeful eye towards UK retail parks, of which British Land is the largest listed owner. These have sold off heavily in recent years but with valuations now half of their 2016 peak, optimists can take their pick. A need for distribution networks — using stores themselves as warehouses — to feed voracious online consumption has created some investment opportunities. British Land most recently acquired Thurrock Shopping Park for £82m, following an initial move into the booming urban logistics market, buying in Enfield for £87m in April.

While well placed retail parks can be refashioned, that will only meaningfully help part of its retail portfolio. Even then, retail represents just 30 per cent of British Land’s properties. Carter must hope that workers return to their desks this year, and keep doing so.

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