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Retailers could gain rent cuts as troubled businesses close two in five shops

Financially troubled retailers have been closing more than two in five stores as the high street comes under increasing pressure from a UK recession.

A report by PricewaterhouseCoopers (PwC) examined the administration announcements of 22 troubled retailers and found that on average they were proposing to close 43% of their stores.

This means that if just 10% of national retailers get into financial difficulty in 2009, then around 4,400 stores could come onto the market, the report says.

PwC is forecasting that retailers might be able to gain cuts in rents.

Gilbertson said: “Landlords may even be prepared to waive rent altogether, provided that the tenant stays in occupation and, at least, pays the service charge, insurance and local authority rates.”

Previously, a similar exercise was carried out in October 2007, May and October 2008 and the numbers increased from 27% to 36% to 38%.

PwC corporate restructuring partner specialising in real estate Barry Gilbertson said: “Trying to calculate the financial effect of these vacancies is also quite complex, but if the average rent paid to lease a high street store or shopping centre unit was to be, say, £160,000 per year then the rental lost to UK landlords just from these 4,400 stores would be around £700 million a year.”

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