Long gone are the days where retail offered guaranteed high returns for landlords. In the last 12 months we’ve seen a substantial number of retailers collapse and admit company voluntary arrangements. It’s my belief that it’s only a matter of time before the sector sees further casualties.
In the wake of this, it’s crucial that landlords and retailers begin to better understand what the consumer wants and that they adapt to this changing retail landscape, otherwise they will quite simply be left behind and as we have seen, collapse.
On the back of the demise of these high street retailers we are experiencing an ever-growing trend of landlords exploring alternative ideas for their stores which they are struggling to let at the rates they were previously achieving. These include part-retail solutions, involving residential and hotel conversions which has been made easier by new proposals that allow changing a retail building’s use. This is going to be crucial if we want to avoid the possibility of these high streets becoming ghost towns. With surplus stock on the high street which landlords are struggling to let it’s an absolute no brainer to look at repurposing for residential use, particularly with the current shortage of housing in the UK.
This is in part due to some rents previously agreed which were grossly unsustainable and retailers are now bearing the brunt. From a landlord’s perspective, the issue of reducing the rent is that they are changing the bench mark for the market. Naturally they will try to preserve the level of rent they would like to see, however unrealistic and damaging to the high street that may be.
In my opinion that is where the major problem lies. The inflexibility and lack of adaptability from landlords to the changing retail market is only going to worsen problems for retailers already facing huge challenges in a fast-changing environment.
2019 will undoubtedly see several more Retail casualities unless the sector becomes more dynamic, making real moves to adapt with the changing consumer patterns and to understand better what the consumer wants.