Landlords must reduce rates or face high street exodus

High street landlords must reduce rents or face a retail exodus

The future looks bleak for British landlords, especially those renting in town centres and cities because everyone knows our high streets are changing.

Fashion retailer Primark recently claimed to be seeking rent reductions of up to 30% in negotiations over new leases. The Irish retailer is considering entering a Company Voluntary Arrangement (CVA) to help reduce payments to landlords.

The move comes weeks after rivals Monsoon Accessorize and the Arcadia Group secured rent reductions after entering CVAs.

Rents for 135 Monsoon and Accessorize stores will fall as part of a restructuring scheme. Similarly, landlords for 194 of Arcadia’s 566 stores face reductions of 25% to 50% over the next three years.

Arcadia’s problem is that its empire was built partially on the back of cheap rents, and while its online services have improved, the business remains crippled by its high street debt burden.

It’s a similar story for many traditional retailers, but there’s little evidence to suggest landlords really understand the long-term implications.

Landlords stuck in the past

The sad truth is that some of them still expect to command the same income they did 10 years ago, and that’s impossible.

They seem to believe tenants should squeeze their profit margins, but retailers are starting to wise up and play hardball.

The big music companies faced a comparable dilemma 20 years ago when they chose to ignore peer-to-peer file sharing platforms.

Consequently, Napster and Limewire stole their marketshare, they lost an awful lot of money, and are playing catch up today.

And that’s why landlords are better off accepting the new market conditions. The alternative is more costly because retailers will simply relocate their estates online, and vacate the properties.

Posted in ,

Commercial Debt Collection: Challenges and Best Practices

09/05/2024

Commercial debt collection is the process through which outstanding debts owed by commercial entities are recovered, typically stemming from goods delivered or services rendered on…

Read More
GFSC

Gibraltar Financial Services Commission: A Lesson in Financial Regulation

27/03/2024

The recent collapse of High Street Group and its security trustee, Castle Trust Management and Services, prompts a closer examination of regulatory practices. Along with…

Read More
de trafford

De Trafford Third Party Recovery: An Update

29/02/2024

The recent financial collapse of multiple DeTrafford property development companies hassignificantly impacted purchasers. As they navigate the consequences, a glimmer of hope arises asthe wheels…

Read More
Northumberland Living

Northumberland Living Developments: Allegations and Challenges

22/02/2024

Northumberland Living, In West Chevington Farm, Druridge Bay, is a development poised for completion. Only to be stalled by an apparent unforeseen historical conveyancing issue.…

Read More