More than half of the units formerly occupied by BHS remain empty two years after the retailer collapsed, new data has revealed.
Figures from the Local Data Company (LDC) have laid bare the size of the ongoing challenge landlords are facing to re-let the properties – and served as a stark warning to owners of House of Fraser stores.
The department store business has cautioned that “some closures will be announced” as new owner Mike Ashley plots his strategy after buying the business out of administration in a £90m deal.
House of Fraser’s anticipated move to shut a number of large units will leave further gaping holes in the high street that could be equally difficult to fill.
LDC senior analyst Ronald Nyakairu said it is “indicative of the challenge landlords will face over the next 12 to 18 months”.
BHS closed its final 159 stores to the public in the summer of 2016, but LDC’s research suggested 84 of them remain vacant, with no plans for new tenants to move in.
Forty-two percent of the former BHS sites have secured new tenants, but only 12 of those 67 deals have been done in the past year.
A number of landlords have been forced to split the former BHS units in order to rent the space to more than one retailer. In Weston-Super-Mare, for example, B&M and Specsavers have both moved in, while in Peterborough the old BHS has been taken over by Joules and Smiggle.
According to LDC, two of the 159 properties have been demolished entirely, three remain under development, two have been split yet remain unoccupied, and one has been merged with an existing retail unit.
Any House of Fraser closures are likely to result in similar struggles to find new tenants.
However, Ashley has vowed to keep as many stores open as possible and the number of closures is almost certain to be fewer than the 31 the retailer outlined under its previous CVA plan.
But who would be the prime contenders to take on any HoF stores that do come onto the market?
Primark has taken over the largest number of former BHS stores, with seven now occupied by the clothing giant.
Overall, fashion and general clothing businesses amount to over a third of the new occupants, according to LDC, with Next filling four of the vacant units and H&M taking on three.
B&M has opened in six ex-BHS units, while the expansion of fellow value operators Poundland (five), Wilko (three) and Poundworld (three) – which has since fallen into administration – saw “discount and surplus stores” snap up 30.5% of the units to have found new tenants.
Both the “sports, toys, cycle shops and hobbies” and “DIY, hardware, builder’s merchants and household goods” categories took six stores apiece, with retailers including Sports Direct and The Range among the most active deal makers.
Other retailers not accounted for in the charts include Reserved, the Polish fashion brand that opened its first UK store in part of BHS’ old Oxford Street flagship, and Joules, both of which have occupied one section of a split unit apiece.
The most common way to fill the excess space has seen brands merging more than one fascia under one roof, LDC said. For example, Next has opened Next Home or Lipsy departments, while Poundland has used the larger spaces to include its Pep & Co clothing proposition.
But not all units have appealed to retailers. A number of units have been repurposed for alternate uses – 130 new homes will occupy BHS’ old Ealing branch, for example.
House of Fraser’s units are typically larger than BHS’, thus the question of who could fill the space remains even more uncertain.
Appetite from retailers to take over entire HoF units could be limited, so reformatting any closed stores could be inevitable.
Nyakairu believes any House of Fraser stores that close in the South and in Greater London are likely to be converted into office or residential space, where there is the highest demand for both.
However, he expects Primark and B&M to take over a large number of the units, and suggests that furniture companies looking to expand into city centres could also be tempted to swoop.
Some locations, however, will prove more desirable than others, if data on BHS’ estate is anything to go by.
Six out of the eight ex-BHS stores in the North East have achieved reoccupancy, the best success rate in the UK. LDC suggests this was achieved because many of the retailers that moved in did not already command a presence in this region.
Greater London boasts the second highest percentage at 73.3%, as, unsurprisingly, this is where the greatest demand lies for free space, both in retail and other sectors.
In contrast, Scotland has found it hardest to attract new tenants, filling just two of the 16 units BHS left behind.
Nyakairu explains that the two filled lots in Edinburgh are more appealing due to the population there.
“Smaller towns such as Falkirk and Ayr hold no attraction,” he said. “Even the Glasgow and Aberdeen stores are hard to fill because the majority of retailers already have a presence in these locations and are unwilling to adopt a secondary unit.”
Until recently, 31 House of Fraser stores were slated for closure under former owner C.Banner, but many, including its Oxford Street branch, have received a reprieve under Ashley.
The location of the 12 stores it now plans to close remains unclear but Nyakairu warns: “Areas with high demand will be easier to fill, whereas the challenges will be smaller towns where the pool of retailers without a presence is smaller.”
A number of landlords could be set for another prolonged headache.