Jones Lang LaSalle calculates that landlords now need to re-let 14 million square feet of vacant retail floorspace."There is serious oversupply, and that's a big issue for property companies," said Guy Grainger, head of retail at the broperty consultant. "The immediate cost to landlords is rental voids, but this level of vacancy will affect any form of rental stabilisation for several years."
Jones Lang is jointly advising administrator Deloitte on the disposal of 815 Woolworths stores. The Investors Chronicle understands that leases on 200 of the smaller properties are likely to be sold to supermarket retailers including Iceland, Budgens and Spar. However, it is thought that 600 of the larger stores will come back to landlords, including the 15 giant Big W stores on retail parks. Given the current state of the retail market, these units could stand vacant for years.
The listed property companies Hammerson, British Land, Land Securities, Liberty International and Capital & Regional may only have a handful of shops let to Woolworths and MFI, but rising vacancy rates will be scrutinised in forthcoming trading statements. The growing number of retail casualties has dire implications for rent reviews going forwards, with more expected to collapse when March quarter-day rents are due.
"Most of the retailers I speak to are more concerned about the next two months than they were about Christmas," added Mr Grainger. "However it will provide the ideal opportunity for foodstores such as Tesco, Sainsbury and Waitrose to increase their dominance in town centres".
