A year has passed since the closure of 100 Debenhams stores in the UK, and the majority of these empty spaces have yet to find replacement retailers. This highlights the challenge of filling these large, vacant units. While there has been a rise in the redevelopment of retail and leisure premises in 2021, with over 9,100 developments, a report by the Local Data Company (LDC) reveals that 5% of high street units and 6% of shopping centre units have been empty for more than three years.
Despite this, there is a glimmer of hope as the overall number of empty stores in the country has decreased for the first time in three years. According to the LDC, the national vacancy rate for stores dropped by 0.1% in the second half of 2021 compared to the first half, reaching 14.4%. This signals the first decline in national vacancy rates since 2018. Additionally, the retail vacancy rate, which peaked at 15.8% in 2021, has now fallen to 15.7%. Shopping centres, which took a severe hit from the pandemic due to customers avoiding crowded spaces, have seen a slight improvement in their vacancy rate, decreasing by 0.3%. However, the rate still remains high at 19.1%. On the other hand, retail parks have demonstrated resilience throughout the pandemic as they appeal to shoppers who prefer driving over using public transport. As a result, they have been able to maintain higher rent prices.
The closure of department stores and the surge in online shopping have had a significant impact on high streets and shopping centres. In 2020 alone, 17,500 chain store outlets vanished from UK high streets, leading to a wave of store closures. The LDC predicts that store vacancy rates will not return to pre-pandemic levels in the near future. Repurposing these closed department stores has also proven to be a challenging task, although some have successfully been transformed into offices and residential spaces.
Lucy Stainton, the commercial director at the LDC, views the latest figures as a reversal of the previous decline in physical retail caused by the pandemic. She attributes this positive development to the flourishing of independent retailers, chains reevaluating their growth strategies, and a significant amount of repurposing and redevelopment taking place. Stainton emphasizes the importance of closely monitoring these trends to determine if this marks the beginning of a new phase for physical retailing.
While there is hope for a physical retail revival post-pandemic, it is crucial to acknowledge that the “final shake-out” of retail insolvencies and company voluntary arrangements may still be ongoing. The lasting effects of the pandemic on the retail industry will continue to unfold, and only time will tell how the sector will adapt and recover in the years to come.
Useful links:
1. BBC News: The decline of the high street: Is closing stores an answer?
2. Financial Times: Retail parks cash in on shift to cars and countryside
