Falling apart at the seems…UK Retail Market in jeopardy?

 “20% of retail space will need to close over coming years as costs, including business rates and wages, rise while sales in physical stores continue to fall.”

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Recently at Vantage we have seen a sudden slump in the demand for retail space and a sharp rise in the demand for CVA’s and dilapidation surveys on behalf of retail landlords.

In lament terms this means that more retailers are moving out than moving in. But why?

                                                       Shift in consumer habits

One major factor has been the advent and expansion of online shopping. “20% of fashion sales, where the pressures are perhaps worst, have now moved to the internet.”

Titans of the online retail industry such has Amazon and Boohoo.com have provided consumers with an alternative to having to get up and physically visit a store.

The alternative has been so successful in fact, that since 2010 Amazon has invested £6.4billion into UK industrial property. And things are only set to get worse for UK retailers, as Amazon has announced plans to move into the food sector. Already major supermarkets shares have fallen.

Recent Victims:
Toys ‘r’ Us
Claire’s Accessories
Prezzo
House of Fraser
New Look

                                                       Lack of out of town demand

In areas with smaller economies such as small towns, villages and rural areas: increasing house prices, lower real wages and mounting debt has meant that consumers have less disposable income. Leaving retailers no other option but to shut shop and head for the city.
Result? Commercial/retail landlords are left with vacant premises.

“Fashion retailers are moving out of smaller towns and shopping centres but are still looking for larger stores in prime locations.”

Small Town

                                                                      All is not lost

In out of town areas there are still some retailers that are thriving, mainly: electronic cigarette shops, hearing aid stores, and ice cream parlours. And the recent rise in demand for boutique and artisanal stores is helping landlords fill those smaller locations. Especially in small temporary pop-up stalls and events.

N_indoor_market

For inner city locations it looks like consolidation and keeping an open mind is the key. Big department stores such as House of Fraser and Debenhams have already begun to adopt this approach, by sub-letting vacant space out for modern purposes, such as: co-workspace companies, pop-up boutique markets and art/music exhibitions.

Which is all good news for landlords specialising in the retail sector.

At Vantage we are seeing innovative ideas- and companies that are creating new purposes and opportunities for buildings, everyday. And we understand that when one sector fails, another will succeed.

So landlords don’t be too worried, keep an eye on the emerging markets and an open mind when it comes to tenants. And remember! Seek specialist advice! Get in touch…we’re here to help.