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Discount, grocery and fashion retailers pick'n'mix ex-Woolworths stores
Archived article dated Thursday September 3rd 2009
The latest report from CB Richard Ellis (CBRE)investigates what has happened to the former Woolworths stores after the century old high street retailer closed its doors last December.
To date around 60% of stores from the 800 plus Woolworths portfolio have either been let or are currently under offer.Leading the charge on take-up are discount retailers, such as B&M Bargains, 99p stores and Poundland taking up 134 stores (37%); followed by grocery outlets, including Iceland and Tesco, taking up 110 stores (31%); and fashion operators such as New Look and Peacocks taking up 53 stores (15%).
Ciaran Bird, Head of UK Retail at CB Richard Ellis said: “Given the current economic conditions, the challenges facing retailers looking to expand in such a tight market, and the fact that potential buyers are waiting until leases are returned to landlords, the speed at which Woolworths units have been taken up is remarkable.”
“Market conditions have been instrumental in dictating the type of retailers that have acquired the ex-Woolworth sites and our research indicates that fashion operators moved to acquire large, prime units, in the strongest trading locations, enabling them to display a full range of stock, whereas the discounters and grocers have looked to take advantage of the current market and gain market share where they can.”
“The relative strength of the retail destination, the size of the unit and individual retailer requirements were the key drivers for acquiring sites.”
“Cherry-picking of the stores in the first few weeks after Woolworths went into administration reflects a fundamental issue in the UK shop market - a shortage of large, prime space. With very little in the way of new supply coming through, primary stock shortages will inevitably reappear the moment expansion activity lifts and the Woolworths activity demonstrates how acutely aware retailers are of this happening.”
For the past few months reports have circulated that the majority of the former Woolworths stores are vacant but CBRE's report, Woolworths - what happened next?, shows that 60% have been taken up or are currently under offer. Of the 40% or so stores still remaining, many are located in secondary and tertiary retail areas of in off-pitch trading locations.”
“A number of stores appear to remain un-let, yet in many cases they are only empty because they are awaiting completion of the legal process and shop fit-out,” Ciaran Bird added.
The rental levels agreed by new occupiers that were available to researchers, demonstrated a mixed scenario with 55% at higher levels than those paid by Woolworths, 35% below and 9% remaining at the same level. Incentive packages offered to the new occupiers reflect the strong position in which many retailers find themselves in as landlords look to fill vacant space. The equivalent of 12 months rent proved the most common capital payment but rent free periods 3 - 24 months. The incentive package comprises both capital and rent free.
Tagged as: woolworths | property | tenants |
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