A radical approach to property leasing is being proposed to help shopping environments in the North West of England and throughout the UK.
The five-point plan from leading property consultancy Colliers International is aimed at creating viable trading space for retailers and landlords and investors to find occupiers for the rising amount of empty shops across the UK.
The proposals are a response to the havoc that has been wrought on the sector by major increases in business rates last year, further growth of internet sales and the alarming number of retailers shedding stores through Company Voluntary Agreements (CVAs) this year.
In the North West of England, recent casualties of the high street malaise included Manchester-based clothing firm Henri Lloyd, which entered administration prior to Aligro UK acquiring five stores and some of the stock and assets of the business, with fellow Manchester fashion retailer Bench also entering administration.
As part of its CVA, high street fashion retailer New Look announced plans to close 60 of its 593 stores nationwide including those in Bolton, Stockport, Wigan and Rhyl in North Wales and the restructuring proposal of department store House of Fraser included it withdrawing as an anchor tenant of Chester’s £300m Northgate scheme and stores in Altrincham, Birkenhead and Carlisle earmarked for closure.
Colliers’ Retail Agency Director, Dan Simms, comments: “We understand the inordinate pressures that retailers are currently facing as long-term structural changes to the retail market play out. But retailers, landlords and investors face equal challenges, and the way forward has to be an equitable approach which respects the situations of both.
“The property industry now needs to think about a radical reshaping of the lease model for much of our retail property.”
The proposals call for a five-point plan, which would better balance the interests of retailers, landlords and investors. They call for:
Simms observes: “These types of lease features are relatively common in the retail factory outlet environment but have not been brought in a structured way into the mainstream market. They create genuine alignment between landlord and occupier and offer the opportunity for a flexible approach to costs and lease duration.
“This isn’t just blue sky thinking. This model won’t be relevant to some circumstances, particularly in fragmented ownership High Streets and for flagship stores but there are an increasing number of similar leases being agreed across the UK and we are close to launching a leasing campaign for a new mall redevelopment within a well-established shopping centre where all leases will be offered on this basis.”
The proposals come ahead of the consultancy’s annual Midsummer Retail Report which is launched this week. The report also calls for reform of the CVA process and suggests a series of areas where the process can be changed to make it more equitable.
Commenting on the wider North West retail sector, David Fox, head of retail North at Colliers, said the number of vacant sites in the region had increased in the past year, thanks partly to the rising number of CVAs and still empty former BHS stores.
David said: “We are set for a bumpy ride in the North West over the next 12 months. While there are a variety of pressures on retailers which are squeezing profit margins, the continued structural change in the retail marketplace is the driving force, creating a significant imbalance of supply and demand.”