A new industry-wide group - the Distressed Retail Property Taskforce – has been established to rejuvenate depressed high streets with membership from senior figures from banking, retail and property sectors.
The group held its inaugural meeting last week with members from the British Council of Shopping Centres, the British Property Federation, the Local Government Association, Lloyds Bank, the Royal Bank of Scotland and the Booksellers Association.
Shopping centres and individual shops in high streets have declined markedly in value as the recession has robbed them of custom but landlords are unable or unwilling to invest and at the same time loath to sell at a loss and and write off their debts. Often they owe more to banks that the current value of the property portfolio.
Many landlords are also unable to cut the rents they demand in order to keep existing tenants or attract new ones because they have to earn a minimum rental income to keep up with their debt payments.
This leads to increasing numbers of landlords and their lenders holding idle or dilapidated retail space in the hope that the economic landscape will improve soon; an uncertain scenario.
The challenge for the Distressed Retail Property Taskforce is how to break the stalemate. Its first task over the next six months will be to map the scale of the problem of retail property indebtedness across the UK.
ECONOMIC PARTNERSHIP COMMENT
Mapping will be the easy part; coming up with some solutions will prove harder but the governor of the Bank of England, Mervyn King, may have given a clue saying last week, "I am not sure that advanced economies in general will find it easy to get out of their current predicament without creditors acknowledging further likely losses, a significant writing down of asset values and recapitalisation of their financial systems."
Read related items on:
Retail, pubs, clubs and restaurants