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14 Jun 2022

Data: a fundamental ingredient

Written by

Jane Reyersbach considers the legal practicalities for landlords harnessing tech in retail property.

One of the more understated and possibly less talked about changes to modern retail leases in the last few years has been the introduction of data clauses.

Commercial landlords can now utilise data collected from buildings and their occupiers to make intelligent and often cost saving decisions as well as improving customer satisfaction.

Given the rise in the number and availability of mobile applications, direct wifi or cable links and secure websites, landlords are now able to collect and scrutinise figures and produce more
statistics than ever before. They can target the exact information required and set the format in which it should be collected.

Data is therefore more relevant and can be collected in real time. Management changes can be implemented quickly and response times are faster, increasing efficiency and saving on cost.

In order to allow landlords to collect data from tenants it has become common place to include wording in retail leases that either permits a landlord direct access to or requires a tenant to input or provide specific information. Such clauses are not now limited to turnover leases. Standard clauses in modern retail leases include:

  • Sales/ turnover data: requires tenants to provide or allows landlords to collect details of the number and type of transactions passing through a retailer’s tills for a specific period as well as footfall information;
  • Energy meter data (water, gas, electricity consumption): these often cover the sharing of environmental performance data and the installation of meters and other measuring equipment; and
  • Data on waste production and recycling: tenants may be required to provide details as to how much waste they produce and how much of it is being or can be recycled.

Sales data

Sales data has long been collected by shopping centre landlords by way of direct central computer link to the tills. However, for those with portfolios that are more geographically spread it
has not always been possible or cost effective to install the necessary wiring and till technology. Mobile applications and secure websites have reduced the need for this type of investment because, whilst the onus is placed on the tenant to input data, the information provided can still allow a landlord to build up a picture of where and how consumers are spending.

Tenants are able to input anonymised sales data on a daily, weekly or monthly basis. The landlord can then analyse the figures and track the number and type of transactions in each store.

Technology is also available which enables landlords to track footfall into and out of a particular unit and even down a street so as to see where people commonly stop to browse and shop.

Footfall data can directly feed into landlord provision for public realm improvements as well as informing placemaking decisions.

Another source of data that landlords often utilise is from credit card companies. Transaction data can be examined to discover where, when and how people shop. While this information
is not directly attributable to a particular unit it can still prove useful to analyse general trends.

Energy usage

As sustainability credentials become more and more relevant, environmental efficiency is a key focus. Reducing energy consumption is an essential part of the puzzle and in order to do so it is crucial to know how much is being consumed in the first place.

Landlords are now able to track energy consumption across a portfolio using smart meter data by linking meters from different buildings. Further, within each property, it is possible to look at energy consumption by the different services, for example air conditioning systems, lighting, heating, etc. The information obtained will inform how the property is being used and highlight any maintenance issues on each particular system. By reviewing and tracking the usage data, changes can be made to optimise efficiency, thus improving environmental performance and saving costs.

Privacy and security

When it comes to disclosure of information, privacy and security of that information is obviously extremely important. Tenants are often unwilling to share personal or specific data for fear of it being released into a wider network.

The General Data Protection Regulations serve to provide statutory protection but many commercial leases now also contain privacy clauses. It is prudent to set out exactly how information may be used and shared. Landlords may, for example, employ agents and consultants to analyse figures on their behalf and a tenant should be informed and consent given for such sharing of the data.

Future trends

Collection of data is now fundamental for retail landlords. It informs and enhances decision making enabling a sustainable and profitable tenant mix, can assist with design of public realm and improve environmental performance of buildings. Privacy and security concerns should never be ignored but so long as a tenant is clear on how their data is to be used and stored, they can provide informed consent to such use. Ultimately targeted and relevant data collection can be beneficial to both landlord and tenant alike and so we are likely to see even greater use of apps and tracking software in the future. Lease wording will need to evolve to keep up with the latest technological developments.