Editor: This week’s collapse of travel giant Thomas Cook has led to the closure of more than 550 high street stores with immediate effect (‘All Thomas Cook stores closed “with immediate effect” after travel firm collapses’).
It is just the latest in a long line of high street failures. PwC reported that 16 stores closed every day in the first six months of 2019. The question is: what should be done with the empty units? A recent report by Savills shows that three quarters of retail landlords are considering repurposing vacated space and moving away from pure retail to protect assets from market uncertainty. But if landlords and tenants are prepared to adapt, this should not be necessary.
We could revitalise, rather than repurpose, our beloved high streets. By embracing tech to drive footfall, installing click & collect points to bring customers back into stores and offering more experience-led destinations, stores can become brand showcases.
To achieve this, leasing structures need to become more agile. Occupiers do not want to commit to long landlord-friendly leases. Landlords must accept a tenant’s need for flexibility with shorter terms and more regular options to terminate. Fully inclusive leases would help make lease costs more transparent and offer more budgetary certainty.
On the flip side, tenants must accept that such leases come with less security. Landlords are likely to insist that short flexible leases are excluded from the protection of the Landlord and Tenant Act 1954, meaning there is no guarantee of a new lease when the term ends.
But it should not be incumbent only on landlords and tenants to find a solution. Local government will need to work with industry to encourage enterprise. Business rate increases are not sustainable. Planning policies are often too rigid and driven by political motives.
It therefore comes as little surprise that landlords are now considering alternative uses for retail space. However, with forward thinking and well-crafted leases, landlords and tenants should be able to revitalise the high street without resorting to that. It’s all about evolution, not revolution.
Markus Klempa, managing associate, Stevens & Bolton