A second lease of life for large redundant retail space
Mothercare has just announced it is to close 50 stores across the UK and enter into a CVA with its creditors. It is not the first high profile, high street name to hit the buffers this year.
So far, 2018 has been rough on retail with the collapse of Toys R Us, Maplin and New Look. Many others are in the midst of reducing their portfolios such as Jamie’s Italian and burger chain Byron all announcing closures.
Business rates have been cited in pretty much all of these cases as a negative factor in the harsh trading conditions and commentators are quick to pronounce another nail in the coffin of traditional retail shopping.
But whilst small retailer units may take some time to find a new occupier the same can’t always be said for the larger units and retail warehouse spaces. So, what’s happening to the space that is available?
Here are some of the current new uses that will help ensure business rates keep flowing to local authorities:
Low cost, no frills gyms mean no expensive fit out so empty space can soon be commandeered and put back into use. Low-cost operator The Gym Group has opened up in part of a former BHS in Walthamstow, north London and rented excess space from Sainsbury’s at its store at Murrayfield in Edinburgh. KeepFit4Less also has enjoyed expansion UK-wide.
2. Crazy golf, trampoline parks and indoor climbing walls
“Competitive socialising” is a big thing these days with anything from trampoline parks, laser zones, indoor golf, climbing walls and escape rooms all enjoying boom times. They are usually situated near or next to retail space, so the parents can shop while their kids do their own thing. But the big and successful shopping centres are also attracting activities. Meadowhall in Sheffield has a trampoline centre on its retail park as well as a planning permission in its back pocket for a £300m new “Leisure Hall” extension to its existing malls.
3. Prosecco and pastries
A key focus for retailers and shopping centres is turning themselves into “destinations” – we are seeing retailers such as Next’s including prosecco bars and coffee shops in some units. Debenhams is also going down this route with a focus on “social shopping”. It has ramped up its food offering and the likes of Patisserie Valerie and Nando’s are now in some stores.
Of course, some retailers are still expanding – look no further than Aldi and Lidl whose star is still ascending as they take more bites out of the “Big 4” market share with each passing year.
The Institute of Grocery Distribution (IGD) estimates by 2022, one of every £7 spent on groceries will go to the discounters with the value of their sales jumping by nearly 50% between 2017 and 2022 to about £30bn.
Lidl has more than 700 stores in the UK and plans to open a further 50 this year, while Aldi has more than 750 stores and will add another 70 this year.
When all else fails and the empty space isn’t going to work for retail or leisure that’s when the residential developers could start to circle. The British Property Federation’s chief executive, Melanie Leech thinks there is a huge opportunity from large empty retail outlets. Thinking of the out of town spaces, they may not win any awards for outward aesthetics but, on the other hand, there should never be arguments with the neighbours over parking spaces either.
So, whilst one shop door closes, another rolling shutter may open elsewhere as retail real estate adapts to the new order.
The September Consumer Price Index has been announced at 2.4%.
With Brexit only a few short months away, it seems that most aspects of doing business in the UK will be affected whether significantly or marginally.
Struggling high street retailers may be cheered a little by comments given by business secretary Greg Clark.