Decline department stores leaves landlords with problems
House of Fraser is closing many of its stores. The number of large department stores in the UK has dropped by 25%, from 240 to 180. This compares to the total number of shops in the UK, which have declined by just 1%.
Landlords of large department store buildings are left with the problem of
what to do with them after the stores have closed. Commercial property experts Briton Knowles and Joanne High recently discussed the case of the House of Fraser store in Plymouth, which is due for closure. They suggested that the future of the building is mixed-use with the ground floor converted to small retail units and the upper floors changed to residential use.
Others have suggested that large empty department stores could have upper floors converted to office space. In the past, department stores have been converted into hotels.
House of Fraser stores contain several concessions, which were trading profitably. It could be that the concessions owners would like to open retail units in the building after House of Fraser stores close.
The retail sector is struggling with the closure of several retail chains. When a store closes, property landlords have a reduction in income but may still have to meet payments for commercial mortgages used to purchase property. Changing a buildings use may be the answer. Converting retails spaces to other uses can be expensive, but bridging finance may help fund building development work.