B&Q has secured a 10% reduction in rents for seven of its warehouse-format stores in a deal with landlord British Land.
The DIY giant has signed new 20-year leases – without break clauses – with British Land on the seven shops that the landlord acquired from B&Q in a sale and leaseback deal in 2005.
B&Q was approaching the date of its break clause on the previous leases. The new deal gives the retailer a rent reduction while providing British Land with the security of a strong long-term tenant.
B&Q director of property Iain Small said: “This re-gear is in line with our company-wide policy to reduce costs across the business. We are pleased to have achieved an immediate 10% rent reduction across seven key trading stores totalling about 700,000 sq ft.”
The Kingfisher-owned retailer has previously agreed rent freezes at several stores, and agreed with some landlords – such as Morley – to end open-market rent reviews. The British Land deal shows that landlords are increasingly accepting more flexible terms on out-of-town stores in the challenging retail climate. The stores are in Ashford, Exeter, Glasgow, Newcastle, Grimsby, Lincoln and Bury.
British Land asset manager John Maddison said: “This transaction demonstrates our flexible approach to customers’ changing needs and at the same time it meets our strategy to drive values and shape the portfolio into well-let long-term investments.”
Martin Supple, head of out-of-town retail at property agent Cushman & Wakefield, which represented B&Q, said: “This re-gear deal is a win-win solution for both parties.”
B&Q has been disposing of unwanted space since 2006. It also carried out a “right-sizing” programme whereby it sought to carve up some of its warehouse stores and let some of the space to other retailers such as Dunelm and The Range. The retailer still has about 15 to 20 unwanted shops in the UK.