Retail space conversions accelerate as landlords seek more profitable tenants
What had once seemed unthinkable is now not only happening but accelerating as Britain’s department stores (and some other retailers) crumble and their giant spaces are transformed for new uses. And a spate of news on Monday showed the extent of the issue.
The Times reported that shopping centre owner Capital & Regional has struck a deal with a company that transforms under-used shopping centres and car parks into urban farms, neighbourhood kitchens, fulfilment centres and e-scooter rental stations.
It’s Reef Technology’s first UK deal and comes as Capital & Regional is reportedly seeking to find alternative uses for parts of its malls in Luton, and Wood Green. Talks are also taking place around space in its Walthamstow and Ilford sites.
And the need to find different types of tenant isn't only affecting smaller mall operators. The newspaper also said there are rumours that the former House of Fraser store in the giant Westfield London mall could be on the shopping list for DMGT, the publisher of the Daily Mail among other newspapers, for its new HQ. Neither Westfield for DMGT has commented.
If it happened, it would make the company one of the first big employers to take up space in a disused shopping space. Plans to turn the store into a co-working space were approved by the local council in 2020.
Redundant shopping space is noting new as the fact that almost five years after BHS collapsed, some of its store space remaining empty shows. But the fact that this is space in the key Westfield location in Europe is a bit more surprising and highlights the challenges landlords face in finding retail tenants at present.
Of course, the expected recovery later this year could lead to a retail boom and a subsequent rush for space in Britain’s supermalls. But that’s not necessarily going to be the case for smaller malls or town centres, which makes Capital & Regional’s decision to explore alternatives a sensible one.
Its project comes as landlords also seek profitable new tenants for the raft of Debenhams department stores that will soon close.
Last week, Frasers Group said that because of only limited support being forthcoming in last week’s Budget, it was unlikely to bid for any former Debenhams spaces and help to keep them as stores.
And on Monday it emerged that plans to redevelop the failed department store chain’s Leeds city centre site into new commercial units and student accommodation will be presented to the council later this week.
Around 16,000 shops closed down last year and almost 1,000 shut in the first two months of 2021, with many more expected to close post-lockdown. John Lewis Partnership reports its results this week and there have been rumours that it too will announced further store closures, which would mean more giant spaces struggling to find new tenants.
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