Toys R Us’ vacant UK units are expected to be snapped up by rival toy retailers and discounters as its insolvency hits landlords.
Following the toy retailer’s fall into administration last week, retail property experts have placed their bets on Aldi, Lidl and The Entertainer to fill the space when they’re made vacant.
“Discount food retailers such as Lidl and Aldi have been looking at those opportunities in recent months, and there is also the option to sub-divide the stores,” Colliers International’s Dan Simms told Property Week.
Though Toys R Us’ administrators Moorfields has said that the future of the portfolio remains undecided, the rapid expansion of both the grocers and The Entertainer, which has announced plans to open 20 to 30 new stores during the year, means both the 26 big-box out of town units and 79 smaller units would make prime expansion opportunities.
The collapse of both Toys R Us and Maplin last week, which have now put the fate of over 300 stores in question, have acted as a red flag for retail landlords.
Company voluntary arrangements (CVAs), which enable companies to offload loss making stores without collapsing entirely, have been criticised by the property industry for allowing retailers to dishonor their obligations.
In the week before Christmas, Toys R Us UK secured a CVA which prevented it collapsing in the short term.
However, the process is gaining a reputation among landlords for simply prolonging the inevitable.
Chairman of commercial property investment firm Olim, Lord Oakshott told The Times: “If you can just walk away from stores you don’t want in your chain, it’s grossly unfair to other retailers.
“CVAs are often driven by private equity boys. They think it’s like America, where dishonouring your obligations is normal.”
Shopping centres have seen a dramatic decline in value in recent years as online competition, dwindling consumer spending power and rising business rates make investment far less attractive.
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