Savills research into CVAs finds one third of stores switch to monthly rents
As the retail industry faces a well-documented rise in the number of operators undertaking company voluntary arrangements (CVAs), research from Savills gathered since January 2018 shows that almost a third of all units that enter into a CVA have switched to monthly rents, rather than seek rent reductions or planned closures.
Savills data shows that 30% of stores that have been impacted by a CVA, administration or liquidation have only switched to a monthly rent so far in the process. Conversely, 24% of affected units have been earmarked for closure, while 37% have sought rent reductions in some capacity.
Research from Savills into the impact of CVAs, administrations and liquidations on the retail market has found there has been a larger impact overall in the in-town sector in terms of the number of units affected (with a total of 2,683 units affected in comparison with 1,522 units out-of-town). However, despite these high numbers, only 539 in-town stores have been earmarked for closure, representing just 0.5% of the in-town market as whole. Likewise, 527 stores are set to close out-of-town, representing only 1.3% of the entire out-of-town sector.
Sam Arrowsmith, associate director in the Savills research team, comments: “CVAs continue to dominate the current retail landscape, and it is interesting to see the split in terms of retailers opting for monthly rents, rent reductions or closures. Each option will impact landlords in different ways, as while monthly rents may seem the more favourable option, the process of collecting payments on a monthly basis will still have an effect on a landlords’ cash flow.”
