Recent analysis by The Local Data Company has shown that almost 50 stores a day have closed in the last six months.
These closures have decimated our shopping centres and high streets and it is hard to see how the outlook for retail shops will improve in the foreseeable future. Although there were a total of 3,488 stores opened, a total of 8,739 closed with fashion, charity shops and car & motorbike showrooms topping the list of closures.
The research shows that we have lost 120 department stores and this represents significant square footage of many high streets and town centres. There is talk of much of these units being converted into residential but time will tell whether there will be the demand for town centre living with more people working from home post the pandemic.
The impending end of furlough is expected to cause a huge swathe of redundancies by businesses that have been “kicking the can down the road” relying on Government support to continue trading. It is hard to see how this will not further impact the outlook for traditional retail.
Add to these numbers the extent of commercial rent arrears due to the pandemic and the picture becomes even more worrying. The Government review into the level of rent arrears shows that tenants claim to owe almost £6 billion whilst landlords claim they are owed £1.7 billion. Whatever the actual figure is, this is a worrying scenario with the Government expecting landlords to “share the pain” of the arrears.
As we have said before, we do have many entrepreneurs who are optimistic about the future but it is hard to see that there will be sufficient demand to take on the growing number of empty retail units across the UK. Basic economics teaches us that excess demand leads to falling prices meaning that new leases are likely to be at significantly lower rents creating another problem for landlords as they seek to make good the losses due to the current rent arrears. .
To survive and prosper it is vital that all businesses act decisively and seek independent professional advice and that is why we are always available for an initial zero cost assessment which can be arranged by contacting Alistair Dickson or Mark Phillips.