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RESCUE ADMINISTRATIONS


To save or n T


here are rivers of blood on the high street. The number of retailers that have collapsed recently reads like a who’s who of the sector: HMV, Jessops,


Comet, JJB Sports, Peacocks and Blockbuster to name but a few. And there’s more to come, according


to industry observers. Particularly vulnerable are those companies with large property portfolios and which are vulnerable to the surging growth in online sales. Whether the failed retailers are worth


saving is a moot point. Each case is different, but there is some common ground across all of the recent


10 Summer 2013 www.estatesgazette.com


collapses, such as mountains of debt that could no longer be serviced. Many of the casualties have been dragged down by huge contractual leasehold liabilities they could not get out of. HMV, with 247 stores across the


country, was arguably one of the most high-profile casualties. Its demise is indicative of the problems affecting many retailers. Mark Swiers, head of property insolvency at Sanderson Weatherall, points to the huge costs some companies carry: “How many of HMV’s stores were profitable? It probably had too much floor space to sustain its operations. “One store could cost £500,000 in rent,


£250,000 in rates and £100,000 for services every year. If that store is not profitable and it’s tied into a 10-year lease, it’s not easy to close it down.”


Traditionally, store leases were for


25 years, but when American operators entered the market and insurance companies began demanding shorter leases, the terms dropped to 10 years with five-year breaks. Given the current economic climate, stores that were previously being shored up by more profitable locations have now become a dead weight. Mothercare is another well-known


brand that has had its difficulties. In the past year it has disposed of 25 poorly performing units. Exiting the lease has cost the company, but it had little choice if it did not want to become another high street casualty. Tony Devine, head of high street,


CBRE, points out that landlords have to become more open to change. “Lease


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