Three years after BHS went into administration, 53 stores are still sitting empty – Major restructuring and repositioning of UK retail space on the way
After 88 years of presence on the high street, BHS closed its doors for the final time on 28 August 2016. However, three years after the retailer went into administration, 53 stores (approx. 2.5 million sq ft) are still empty – representing 32 per cent of the chain’s original 163-store portfolio.
This latest data was published by the specialist Retail team of global real estate advisor Colliers International. It lays bare the extent of the vacancy epidemic currently plaguing the UK’s high streets.
In June, Colliers International released its annual Midsummer Retail Report, which revealed that approx. 11 per cent of the UK’s high street and neighbourhood retail stock is currently vacant, while 33 per cent of this empty space (approx. 30 million sq ft) has been vacant for two or more years.
The firm predicted that a major restructuring and repositioning of UK retail space is on the way.
Dan Simms, Co-Head of Retail at Colliers International, says: “It may be controversial, but we need to be realistic – this is not sustainable, for landlords and local communities alike. Space that has been empty for a period of time that is this prolonged will never, in all likelihood, have a retail use again.”
Colliers predicts that one in three retail spaces which have been vacant for two or more years will cease to have a retail-related purpose in the future.
Simms continued: “Taking this into consideration and looking hard at the current state of the UK’s retail landscape, we believe that this trend will continue. The dilemma is how to reverse its crippling effects and ensure this space doesn’t stay vacant. The ‘obsolete core’ must be tackled.
“What’s encouraging is that the retail property market is already well underway in its response to this and there are repurposing projects taking place across the UK to help reduce, convert and, in some cases, remove this empty space entirely.”
Indeed, some of the ex-BHS store that are still vacant are heading towards a new future, but not as shops. At the former BHS store in Stratford-upon-Avon, for example, the site has been bought and an operator has been found for a new 170-room hotel. The site will also be used to create a new restaurant, with no onsite retail.
Matthew Thompson, Head of Retail Strategy at Colliers International, agrees that a new direction is needed: “The retail industry employs 3 million people – 10 per cent of the population – and generates 5 per cent of the country’s GDP, with almost £400 billion of sales each year. Its not enough to leave this space vacant with no way forward.
“We need to take a much broader approach to this problem to find a solution in which vacant space can be reimagined to realise new value, deliver interesting uses and reduce the mountain of empty space.”
David Fox, Co-Head of Retail at Colliers International, comments: “The trend towards urbanisation – where people want to work, live and play in the same urban location – means that there’s new potential for the high street and in-town shopping centres to create new homes. Previously, selling off homes in a mixed-use environment caused ownership problems, but with the rise of ‘Generation Rent’, this way of repurposing retail space is on the rise.”
Not only will high streets be given new relevance with the rise of ‘reimagined’ retail, but an end to the ‘Golden Age’ of online retailing is also set to drive shoppers back to physical stores.
According to Colliers’ Midsummer Retail Report unsustainable business models, growing competition and environmental concerns spell an end to free delivery and returns, which defined the internet’s Golden Age: “The days when you could order three items of clothing in different sizes, confident in the knowledge that you could return all of them free of charge, are coming to an end.”
Head of Retail Capital Markets, James Watson, says: “There are now 60 per cent more vans on UK roads than there were a decade ago. The upcoming generation of shoppers is even more environmentally aware; they are questioning the wisdom of items travelling huge distances – only for them to be returned and rack up more ‘product miles’ – and people are realising that there’s no such thing as truly ‘free delivery’. To address this impact, we can foresee the introduction of a new form of suburban congestion charge being levied on delivery vehicles.”