Department stores have traditionally been the beating heart of towns and cities across the UK. Offering customers a diverse range of goods under one roof for decades, they were synonymous with luxury and high standards of service. However, times have changed, and the combination of the growing popularity of online shopping, rising overheads and rapidly changing consumer habits have all proved detrimental to the continued success of these stores.
Debenhams, House of Fraser, BHS, Beales and John Lewis are examples of renowned department stores that have been headline makers for all the wrong reasons over the last few years, as retailers enter liquidation or try to consolidate their portfolio. As a result, plenty of buildings in prominent town centre locations are now vacant.
Making room for new concepts within tired spaces
The much publicised transformation of the former BHS on Oxford Street is a good example of what can be done to reinvigorate an outdated space. It has been turned into a mixed-use development, which includes a traditional ground floor retail unit, in this case, the first UK store of Polish retail chain Reserved, with the upper levels occupied by Market Halls West End, the largest food hall in London, and Swingers Crazy Golf Club.
Over the last 2 years, Allsop has been extremely active in the sale of former department stores. In late 2019 Allsop completed on the sale of the Beatties department store in Wolverhampton, most recently leased to House of Fraser, on behalf of the Receivers. This attractive, 140-year-old building located in the heart of Wolverhampton city centre is a much-loved landmark in the area.
The 375,000 sq ft store sits on a prominent 2.64 acre-site in close proximity to Wolverhampton University’s campus. The building, despite its fantastic location, had its challenges, and when the lease to House of Fraser terminated, the landlord would have faced a rates liability of close to £500,000 per annum.
However, the owner managed to sell the building by offering it at a realistic price of £3,000,000 (capital value £8 per sq ft), which resulted in more than 80 enquiries and 10 bids. Ultimately, it was sold to a private investor who is planning to transform it into a mixed-use scheme incorporating retail and leisure on the ground floor, residential/student accommodation on the upper levels, as well as potentially securing a lease on the car park to an operator which would offer a secure investment going forward. An ambitious and time-consuming project, it has the potential to benefit the local community and create value for the buyer.
Last year, Allsop was involved in the sale of two Debenhams department stores; one in Hastings and the other in Worcester, both on behalf of Receivers. Hastings comprised a 100,000 sq ft store situated in a secondary position within the town centre – the construction of the Priory Meadow Shopping Centre in 1997 moved the prime pitch away from the store and affected its success. Despite a large, effectively vacant building in the heart of a seaside town which has been lacking in any inward investment for many years, this property attracted huge interest – 30 viewings lead to 9 bids and the property eventually sold for £2,600,000. The buyer intends to maintain the retail use on the ground floor and create almost 100 flats within the upper parts – hopefully this approach will re-invigorate the town by bringing more people into the centre.
The sale of Worcester has just completed – this store was smaller, only 40,000 sq ft but is undoubtedly in the best retailing position in the City Centre. We managed to achieve the asking price of £2,250,000 (£47 per sq ft capital value) and the marketing cumulated in 25 viewings and 6 bids predominately from developers, many of them Birmingham based. The eventual buyer will be converting the store into an artisan food hall and spending £5M on the fit out. The proposed use is becoming a popular model for former stores – other food halls have been created in Hull (on the former House of Fraser) and Edinburgh.
Leaving a mark not just on buildings, but also communities
The UK has approximately 1,200 department stores. Before the outbreak of the pandemic, many were already struggling due to low footfall as a result of changing buyer habits. Lockdown and prolonged store closures have further exacerbated the trend, which means we are likely to see an increase in the amount of vacant large retail units in the foreseeable future.
The good news is that tired and redundant store buildings can be repurposed, helping landlords secure long income and breathing life into high streets across the country. What often becomes clear during the sales process is that Local Authorities, who often do not have the capital to take on a project themselves, are nevertheless eager to help and listen to the new owner’s suggestions. Redundant shopping centres negatively affect the overall streetscape, which is why it is in everybody’s best interest to agree on the best course of action as quickly as possible.
We live in an ever-changing world, and the built environment must reflect our changing habits and preferences, creating a more fulfilling experience for local residents and visitors. Solutions may not always be obvious, and some redevelopment projects will be more challenging than others, but they are often a unique opportunity to create value while benefitting entire communities for many years to come through the provision of new facilities.