Empty shop units: headache and / or opportunity?
13 Jun 2018
It seems that a week hasn’t gone by in 2018 without more alarmist headlines about the high street and the retail property sector.
The last 7 days have been no exception. The media hysteria was taken up a notch, with House of Fraser (HoF) announcing it is closing 31 of its 59 stores. HoF is entering into a Company Voluntary Arrangement (CVA), an insolvency process designed to let a firm with debt problems reach an agreement with creditors to help pay off part or all of its debts.
HoF is one of a number of retailers that have embarked on CVAs this year; others include Toys R Us (now in administration), New Look, Byron, Carpetright and Mothercare. Maplin and Poundworld have also gone into administration. Elsewhere, retailers have been continuing to ‘right size’ their portfolios, with M&S recently announcing it was closing a number of stores by 2022.
Whilst the CVA process, in particular, is creating headaches for landlords in terms of rent negotiations, at the same time newly freed-up space has the potential to open up new opportunities - which many are seizing. Recent experience with former BHS units shows, in place of a tired retailer and with a bit of imagination, units have the potential to be reconfigured and reused for shopping, eating, bouncing or golfing – improving vitality and viability of centres as a result.
As the retail sector continues to go through a process of restructuring and adjustments, there are a number of ways in which Lichfields is assisting clients to ensure positive outcomes are secured.
- Future-proofing strategies: We are helping clients formulate strategies for future-proofing their retail and town centre portfolios, responding to changing consumer and tenant needs. These can include prospective alternative uses and / or development, both those creating floorspace and upgrading tired public realm and elevation designs - all part of enhancing ‘places’.
- Securing change of use for other town centre uses: National trends show a strong growth in the food and beverage sector, broadening of the range and choice of outlets in centres and thus complementing the wider retail offer and increasing dwell-times. We are helping to secure planning permissions for a diversification of uses to F&B, leisure and other town centre uses to help clients curate the right mix of uses and right environment to continue to attract customers.
- Sub-division / right sizing of units: We are assisting clients to sub-divide and right-size units, both through rationalisation and expansion, by negotiating planning conditions, overcoming planning policy tests and addressing heritage constraints to secure the necessary approvals.
- Amending constraining conditions and/or obligations: Large units, in particular, can have historic constraints limiting the range of goods sold and/ or controlling floorspace. We are renegotiating these constraints for clients through the planning system, to enable new tenants to occupy the space and securing the longer term outlook for them.
- Introducing residential uses: We are also helping clients to make the most of sites, with strategies for introducing residential uses alongside, instead of, or on top of existing retail assets. Recent research by Lichfields and the Federation of Master Builders looks at how the potential for new homes on our high streets can be unlocked.
Contact Lichfields for more information on how we can help with your town centre and retail projects.