The government’s U-turn on ‘pre-packs’ has come at a time when landlords and other creditors look for means by which to challenge retailers who are using the pre-pack as a means of reducing rents and to shed debt.

“JD Sports’ purchase of Blacks is one such deal which is testing the patience of landlords” says Jonathan Webb from DTZ’s Retail team. “They are a solvent, acquisitive company whom many (including Sports Direct) believe to have picked up Blacks ‘on the cheap.”

Webb continued: “Overall, the number of high profile casualties both before and after Christmas has not been a surprise. It is now time for commercial property landlords to pick up the pieces and examine the prospects for newly vacant units. They will not be buoyed by the Local Data Company’s latest report which revealed that over 100 former Woolworths units remain vacant (13%) three years on from closure – with an increasing percentage being demolished in the last year. Retail obsolescence is gathering pace as prime pitches shrink and location becomes an increasingly important factor for both consumers and retailers.

“Despite this, there are reasons to be positive. The last few weeks have seen the likes of John Lewis, Debenhams, and Poundland all publish strong like-for-like sales growth. The first two are established anchor tenants, but it is the latter which has taken a large amount of space in recent years, picking up large former Woolworths and TJ Hughes stores to become a value anchor in its own right.

“Fashion brands such as Aurora’s Warehouse and Oasis, as well as Ted Baker and Burberry have also increased sales, demonstrating how the higher end fashion market remains relatively unaffected by the rise of internet retailing. Others, such as House of Fraser, have actively embraced multichannel technology, opening new smaller format stores as part of a ‘bricks and clicks’ strategy.

“Furthermore, supermarkets continue to be acquisitive with all of the main competitors taking advantage of cheap land prices in a depressed residential market to build sizeable development pipelines. However, their continued growth may sound the death knell for several well known ‘at risk’ retailers as CDs, books and cheap clothes all become part of the weekly ‘trolley dash’ rather than a less convenient stroll to the High Street.

According to Webb, 2012 looks set to be the year in which retail obsolescence increases in pace.
He concluded: “Landlords and retailers are hoping to tread water over the coming months, holding out for at least an anaemic recovery to begin sooner rather than later.”