The expectation in the US is that over 25,000 stores may close in 2020, among them many long-established household names, such as:
The trends in the US are likely to be reflected across the European and Irish high street and shopping centres, which makes the competition to retain occupiers a new priority of landlords.
In the UK, the recent spate of company voluntary arrangements, which has forced the closure or rationalisation of many multi-site UK retailers such as Oasis, Warehouse, Laura Ashley, Cath Kidson, Monsoon and Debenhams, has impacted their Irish stores. The headwinds for the high street and shopping malls are likely to remain and cause many more closures over the next few months.
Perhaps the lesson to be learned is that an earlier intervention by landlords and a compromise on reducing rent or trading footprint could have allowed these businesses to remain open with a remodelled operation rather than leaving empty stores in these locations.
Clearly there will be a requirement for landlords to pre-empt changes to the retail environment and to work with occupiers to stave off these worse-case outcomes. This is an opportunity for landlords to drive innovation which might see new entrants to shopping districts, perhaps re-invented department stores, units that offer collections for larger brands or other combined service offerings that will drive footfall.
For more information read our recent article on rent abatement negotiations.
For assistance in considering the appropriate landlord and tenant strategy and establishing a basis for tapered rent, please contact Aiden Murphy or a member of our corporate finance team. Crowe also provides a full range of restructuring and insolvency services including examinership and liquidations, which are useful tools to bring pressure and focus on having landlords engage and help reduce rents.