Find the right space in the right place, says Jones Lang LaSalle
It’s important to look beyond the headline figures when considering retail vacancy data, says Jones Lang LaSalle. While there is a tendency for occupier churn to be reported as vacancy, JLL points out in its new Retail Spotlight report that it can take several months to assign a lease, while fit-out and reconfiguration processes can extend the re-occupation process further.
Non-churn vacancy is a much more serious issue, it says – cases where retail property available to let has little prospect of retailer interest. Again, JLL says, it is worth distinguishing between high-profile blots on the retail landscape, and the so-called ‘ugly tail’ of retail vacancy – shops that are too old, badly located or poorly configured, and which are never likely to be reabsorbed into the market.
What can be done to make empty premises viable for re-occupation? JLL says it can often be a case of knocking together units to form larger stores with more uniform floorplates, or carving up larger units to make a series of smaller shops. The firm points out that retailers’ demands are constantly changing as retail markets evolve. It points to New Look and Next as examples of this: 20 years ago these retailers had an average store size of less than 5,000 sq ft, but they now rarely open a new store of less than 10,000 sq ft.
In the search for the right space in the right place, property owners should aim to cater to the demands of retailers in any specific location, and retail occupiers for their part should also seek the right premises in their preferred locations, rather than expand haphazardly simply to meet targets. The very narrow retail development pipeline, which has limited the expansion plans of some retailers, should not therefore necessarily be viewed as catastrophic, the firm adds.
The large proportion of the ‘ugly tail’ that is unlikely to be reabsorbed into the market can be converted into alternative uses, of which the residential option is the most interesting, JLL says, asking: “With housing shortages in many cities, surely it would make sense to convert redundant retail premises to homes?”
