Woolworths stores pick n mixed by retailers

Woolworths stores across the country are being taken over by discount retailers, grocery outlets and fashion operators, according to a new report by CB Richard Ellis.

The report – Woolworths – what happened next? – 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 per cent 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 per cent), followed by grocery outlets, including Iceland and Tesco, taking up 110 stores (31 per cent) and fashion operators such as New Look and Peacocks taking up 53 stores (15 per cent).

According to the research, in the Midlands, 101 (66 per cent) of the 154 stores are either let or under offer.

Martin Guest, managing director at CBRE’s Birmingham office, 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 off 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 shows that 60 per cent have been taken up or are currently under offer.  Of the 40 per cent or so stores still remaining, many are located in secondary and tertiary retail areas 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,” Mr Guest added.

The rental levels agreed by new occupiers that were available to researchers demonstrated a mixed scenario with 55 per cent at higher levels than those paid by Woolworths, 35 per cent below and nine per cent 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 three to 24 months.  The incentive package comprises both capital and rent free.

ENDS

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