Land Securities, which owns shopping centres including Trinity Leeds, Westgate Oxford and Bluewater in Kent, has slumped to a first-half loss after being hit by several store closures as retailers struggle against weaker consumer spending and a shift to online shopping.
The last two years have been tough for the UK retail industry, as more than 7,500 additional shops have fallen empty. The most recent high street failure is Mothercare, which is shutting all of its 79 UK shops after calling in administrators last week. Others, including Debenhams, Monsoon and Arcadia Group, which includes Dorothy Perkins and Topshop, have used an insolvency procedure known as a company voluntary arrangement (CVA) to close shops, cut jobs and secure lower rents from landlords.
Land Securities’ chief executive, Robert Noel, said the outlook was not encouraging. He warned: “With a general election next month and the UK’s proposed exit from the EU further delayed, there will be continued uncertainty in the near term.”
The company is Britain’s biggest commercial developer. It builds and manages offices, retail and leisure destinations and lost £147m in the six months to September, compared with a £42m profit a year earlier. Retail parks outside London recorded the biggest decline in value, of 11.1%, while leisure posted a 3% decline as casual dining restaurants struggled.
Rental income at the firm’s retail division fell by £2m or 1.5%.Nearly 4% of the firm’s retail space is emptyand 1.4% of the total number of units are in administration, up from 0.9% in March.
Noel said: “The retail market continues to be challenged as retailers adapt to structural change, rising costs and a more cautious consumer … Limited demand for space and poor investor sentiment is impacting rental and capital values.
“We have seen further high-profile CVAs and administrations in the period, notably Debenhams and Arcadia. Clearly, we are not immune from these trends but … where stores have closed, we have had reasonable re-letting success – with more than half of units re-let or in solicitors’ hands as at 30 September.”
Land Securities has been selling retail parks outside the capital, such as Poole, to focus on its London portfolio and its better-performing shopping centres. It is trying to pull in more shoppers by offering pop-up beaches, student nights and dinosaur trails.