British Land has agreed to sell the Debenhams building in Clapham Junction (formerly Arding & Hobbs), to an as-yet undisclosed buyer for £48 million. They originally bought the building in 2005 amid the collapse of previous tenant Allders, and leased it on to Debenhams.
British Land are one of the UK’s biggest owners of commercial property and until recently owned at least 24 Debenhams stores across the country; this sale is part of their a plan to sell off all the ‘freestanding’ branches (i.e. high street branches that aren’t part of bigger shopping malls) in order to reduce their exposure to the retail sector in general, and Debenhams in particular.
To be clear – this doesn’t mean Clapham Junction’s Debenhams is in danger. It’s well located in a wealthy and growing area and it is, certainly by Debenhams’ standards, consistently busy throughout the week. We doubt that Debenhams would want to leave Clapham Junction unless either their hand was forced, or they were made an offer they couldn’t refuse.
However British Land’s worries about over exposed to the department store chain are another sign (as if we needed one) about general fragility of British high streets. Debenhams’ CEO has recently announced plans to close a third of the company’s stores – as he put it, “taking tough decisions” on stores where financial performance was likely to deteriorate over time. With closures looming, we’re keenly aware that we have two Debenhams branches within about a mile of each other – possibly the two closest branches in the whole of the country – albeit the strong local economy means both are quite good-performing ones by the standards of Debenhams’ stores as a whole. If it did come down to an either/or choice, we have informally heard that the Wandsworth branch performs significantly worse in terms of sales, but the building layout there is certainly more modern and may cost Debenhams less to rent.
With several of the Debenhams buildings being touted as potential “redevelopment opportunities” there’s also a risk that the buyer goes for a quick return on their £48m and seeks to push Debenhams out and split all the upper floors in to flats. It’s a big building (139,000 square feet), and British Land have a 25 year lease to Debenhams from 2005 (some sources report 30 years). The initial rent was at £1.25 million a year, with 2.5% minimum annual rental increases and five-yearly open market rent reviews from 2015 – suggesting a decent return for the buyer, but who knows?
What’s not in doubt is that, for all the ups and downs it has had in recent years, Debenhams is important to Clapham Junction. Alongside Asda it’s the anchor tenant in the wider shopping area, drawing trade to the district as a whole and benefitting the smaller traders: any change to the use , especially any move away from retail, would be very controversial. It’s also a major local employer (a typical large Debenhams store employs 100-150 people). And alongside BAC it’s probably Clapham Junction’s most recognisable building – though its listed status means we’re unlikely to see much change to the exterior.
Hopefully all this sale means is a change in landlord – but we’ll be watching any developments closely.