An estimated 30% has been re-let since, Cushman data shows. In part, the future of the balance of remaining space depends on the outcome of administration procedures and the plans of prospective buyers.
Cushman & Wakefield Research explained:
“Last year, for example, Sports Direct’s Mike Ashely bought the House of Fraser. While plans for stores have been announced, it is less clear if and how distribution networks would change. Recently, we started to monitor another 11 retailers that have been under financial pressure – they occupy 4.6 million sq ft across 17 buildings.
“Beyond these figures, the reality is that unless a retailer goes bust, store closures don’t necessarily entail warehouse closures. In fact, quite the contrary. A recent survey by law firm TLT of 100 leading UK retailers found that logistics investment among leading retailers is set to grow from 9% to 12% of annual revenue, with 46% saying that the future of their business depended on improving fulfilment and logistics.”
H&M is a case in point, says Cushman. On the back of poor results last year, the Swedish retailer beefed up its e-fulfilment capabilities through a new, purpose-built 750,000 sq ft facility in Milton Keynes. Many retailers have been busy consolidating and rationalising their footprint. M&S, for example, announced closure of two warehouses in Warrington and London (Wembley) totalling 440,000 sq ft, only to open a larger one in Welham Green (450,000 sq ft) north of the M25. In line with this, the “supply chain” is one of the few areas where M&S’s capital expenditure has increased last year according to the company’s trading statement.
Furthermore, highlighting the shortage of well-located stock in the UK logistics markets, many units offloaded by retailers and wholesalers have been re-let quickly, including Palmer and Harvey’s units in Hemel Hempstead (167,000 sq ft) and Coventry (210,000 sq ft) last year. In some instances, landlords have taken the opportunity to refurbish and reposition the vacated assets, like Palmer and Harvey’s shed (74,600 sq ft) in Leeds, according to Cushman.
Most importantly, warehousing space that is being released by insolvent retailers is just a fraction of the amount of space taken by e-commerce: over 14 million sq ft since 2017, the equivalent of 218 football pitches.
Cushman & Wakefield Research added:
“With no end in sight to the high-street’s woes, we can expect further transformation of retailers’ distribution networks. For example, Debenhams announced ‘further consolidation and automation’ of its warehouses before falling into administration. All in all, as demonstrated, the positive impact of the growth of e-commerce on distribution footprints continues to far outweigh the collateral damage caused by it.
“Interestingly, stock offloaded by retailers is coming to market at a time when supply is growing due to rising speculative development, which could provide a more flexible and affordable option for some occupiers. As the turmoil on the high street continues, landlords would likely be selective in choosing their retailer occupiers.”