It’s now been 2 months since the high street retail giant Arcadia announced it would be going into administration. Owned by Phillip Green, the Arcadia group are responsible for about 444 leased stores in the UK belonging to many well-known high street fashion names such as Topshop, Burton & Wallis. The news that the company would be closing the doors to all of their high street shops was devastating for landlords & communities.

Only a day after the Arcadia groups announcement, Debenhams followed suit and released a public statement that they would ‘commence a wind-down’ of the UK business. The Telegraph recently reported that Debenhams’ total shop floor space spans 13.6 million square feet, making this another damaging blow for the high street. A couple of weeks after their first announcement, the department store recently confirmed that all of their UK shops will be closing.

John Lewis is another high street giant that has been hit hard by the reduced demand for bricks & mortar retail. The 156-year-old establishment has been slowly reducing its numbers of high street stores in a bid to cope with the impact of Coronavirus. It has now been reported that up to 8 more of its remaining 42 outlets will be closed down.

This continuous bad news for the British high street puts landlords and communities in a very worrying situation. With thousands of jobs lost as buildings empty out, experts have warned that property owners with investments in retail and high street locations should start planning for worst-case scenarios. 

What Led to This Point?

For a few years now, the high street has struggled to compete with online competitors offering cheaper prices. This situation has only been exacerbated by the pandemic’s rippling effects throughout society. As online retailers have thrived over the past year (able to maintain steady sales and profits regardless of lockdown rules), high street stores have been hit hard.

According to The Guardian, John Lewis calculated that before the pandemic £6 out of every £10 was linked to in-store browsing. Last Autumn, the store reported that this number had dipped to just £3 out of £10.

For landlords & property companies (such as British Land, Hammerson and Landsec who are listed as having leases with the Arcadia Group), the rising number of high street closures are forcing them to take their properties in new directions.

What Happens Next?

Landlords will most likely be doubtful of pursuing new retail leases after the difficulties the high street has faced this year. Filling empty spaces will be a struggle for most property owners, so they may need to think creatively and more long term.

Many retail property owners are looking into residential options for their empty buildings. In an article for The Evening Standard, Stephen Springham (head of retail research at Knight Frank) said that ‘If landlords weren’t already exploring contingency plans for Debenhams stores, they are now. But many will struggle to backfill the space directly and … repurposing to other uses may be an option, but is actually a lot more complex than many appreciate.’

Springham raises a very relevant point. There will always be options for property owners to reimagine and develop new spaces that thrive on the high street in these changing times. However, it is a complicated process that can take months, if not years to put into action. While the high street recovers, it’s likely that these properties will remain vacant for some time.

Short-Term Solutions for Landlords with Vacant Property Right Now

Melanie Leech, chief executive of the British Property Federation, commented that the closures on the high street will leave ‘a huge gap in our town centres, and significant investment from the commercial property sector will be required to fill it.’. In the short term, property owners need quick security solutions to protect the value of their properties while they work out the next steps.

Many landlords are turning to property guardianship. It is an excellent zero-cost short term vacant property solution that negates the need for expensive security measures. In order to secure an asset, live-in guardians move into a vacant property to provide 24-hour security & maintenance. At Blue Door Property Guardians, we help prepare buildings to be suitable for occupancy and then match the property to our vetted professional guardians. The guardianship scheme provides full, around the clock security to protect the vacant building as well as giving back to the community by utilising the empty space. You can read a more detailed explanation of how property guardianship works and the unique benefits it offers here.

Property Guardianship also tackles a concern that many landlords will be facing right now. Retailers were given a business rates holiday at the start of the pandemic to try and help businesses ride out the storm. It’s been estimated that Debenhams saved around £50 million but the rates holiday will finish this year. Now landlords are faced with empty buildings, they will have to pay empty property rates after an initial 3-month allowance period. If the property is still vacant after 3 months, these fees (alongside additional costs for vacant property insurance) will be a big headache for property owners.

Securing a vacant commercial property with guardians rules out the need to pay empty property rates, or expensive vacant property insurance, as the building won’t be empty. At Blue Door Property Guardians, we have a specific team allocated to help landlords get lower rates for their property in order to save money. This could potentially save big property groups tens of thousands of pounds. 

Property Guardianship schemes may be the high street’s saving grace in this interim period of uncertainty and change. If you would like to know more, please contact us today and we’ll be happy to discuss how we can help your business.