A fundamental shift on the High Street
A FUNDAMENTAL SHIFT ON THE HIGH STREET
An article prepared for the Birmingham Post by Mike Gilmore, Head of Insolvency at Freeth Cartwright’s Birmingham office.
A FUNDAMENTAL SHIFT ON THE HIGH STREET
The general economy within the Midlands has been steadier over the past 6 months or so, with the rate of store closures slowing, the domestic property market improving and reports of a more positive and confident outlook in the business community. However, there are some real bumps in the road on the horizon which could make the prospects of a recovery seem fragile at best.
Firstly, there will be substantial cuts in public sector employment rates before the start of the new financial year in April. Secondly, the upcoming general election will provide a new Government with the excuse and opportunity to make wholesale expenditure cuts and to increase revenue-raising. Within the West Midlands more specifically, the ongoing uncertainty over the position of one of our largest employers, Cadburys, will not assist.
The recovery in the economy is bound to be slow and drawn out and there may be other smaller recessionary periods before we are out of the woods. It could be 2012/2013 before real growth is seen again.
In early February, Ethel Austin became the latest major high street name to slide into administration. This followed the well-publicised cases of Woolworths, Threshers, Adams and many other household names from off our Midlands high streets. The collapse of Ethel Austin will reportedly lead to between 5 and 10 stores across the West Midlands closing down.
There was a small piece of good news for commercial landlords in January with the High Court decision in the case of Goldacre (Offices) Ltd -v- Nortel Networks UK Ltd. In very brief terms, this case decided that, if an administrator of an insolvent company wants to utilise the property the company was renting, the administrator must pay the full ongoing rent to the landlord.
However, the news for commercial landlords is generally not good. This is especially the case for landlords of high street shops. The number of empty shops on UK high streets generally nearly trebled in 2009 leading to 1 in 8 high street shops being empty at the end of December.
With the continued cautiousness of consumers, the upcoming reduction in public-sector workforces and the continuing increased use of the internet for what shopping is actually going on, we will need to get used to the fact that the use of our high streets has fundamentally and in my view permanently changed. The UK will not go back to high streets crammed full of household name shops.
The West Midlands has been used in recent times to city centre living in its main commuter city of Birmingham. Will the Midlands and the UK generally move to have the absolute centres of its other towns also full of houses and flats with pretty much all of our shopping being done in specific shopping centres or on the web?
Landlords and town planners will need to have a fundamental change of approach to high street use and occupation. One thing that is for sure, our high streets will never again be the same.
ends - 22 February 2010