Location, Location, Consternation?
Intu, the owners of some of the biggest shopping centre locations in the country such as the Metro Centre in Tyne and Wear; the Trafford Centre in Manchester and Lakeside in London have announced that their income for 2019 is going to be reduced by 4 to 6% this year and are blaming this primarily on a rise in Company Voluntary Administrations (CVAs) that allows some companies to close underperforming stores and pay reduced rents.
Matthew Roberts, Intu Chief Executive said: “The remainder of 2019 is going to be challenging due to a higher than expected level of CVAs and a slowdown in new lettings as tenants delay their decisions due to the uncertainties in the current political and retail environments.”
In the first three months of this year they have secured 53 long-term leases in their properties, down from 60 in the same period last year and received £6m in annual rent payments, down from £10m in Q1 2018.
Occupancy rates are still high at 95.6% although even this number is down slightly on the previous corresponding period of 96.1%
High Street Sails Away?
The Local Data Company also released their full 2018 yearly analysis into the top 650 UK shopping locations and revealed that the number of empty units has increased by more than 7,500.
The types of stores are changing in nature too. The business types that saw the most new units opening include barbers, vaping stores and cafes while this was offset by increasing closures of banks, pubs and estate agents.
Overall there were 43,278 new business openings (down 4.4% annually) compared to 50,828 closures (up 37%) which was the highest such total in five years.
The LDCs figures confirm Intu’s difficulties revealing that shopping centres saw a 2.2% fall in their number of occupied outlets compared to a 1.4% reduction in high streets or equivalent locations.
Such a lot has happened in the retail sector in 2018 that you could be forgiven for forgetting that many famous chains such as Toys R Us, Maplin and Poundworld closed their doors for the final time and others such as New Look, Carpetright and Mothercare entered CVAs which allowed them to downsize their store portfolio and rent commitments. Many high profile restaurant chains like Gourmet Burger Kitchen and Prezzo also served creditors with a CVA, regardless of their appetite.
Lucy Stainton, head of retail and strategic partnerships at LDC, said that a combination of rising operating costs, Brexit uncertainty, increased rents and business rates along with changes to online shopping habits and consumers leisure time was creating a singularly difficult trading environment for retailers.
She said: “2018 was another unprecedented year of change as the sustained challenges faced by many legacy brands collided with the advent of new concepts – these constantly shifting sands making conditions tougher than ever for most operators.”
LDC drew attention to landlords of malls and High Street units looking at new strategies to make better use of their space including redeveloping retail space for homes or attracting leisure services like gyms. The number of vacant units being demolished, split into smaller outlets or converted to another use rose to 3,577 up from 2,706 in the previous year.
Lucy Stainton again: “This significant increase in structural development of retail space across 2018 indicates that landlords, place managers and councils are starting to take action to critically review how much retail stock is in the market and how much is actually required.
“Over the coming months, we expect this trend to increase, and with it will come redefinition of not just our high streets, but shopping centres and retail parks too.”
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