DTZI ‘to play the long game’ on King Street 

After a string of retail closures on the Manchester street during lockdown, the asset manager has units to fill and the soon-to-be-redeveloped House of Fraser could provide a solution to its high vacancy rates.

Plans submitted this year to convert the Deansgate department store into offices presents an opportunity for DTZ Investors to realise its vision for King Street, by mopping up the raft of House of Fraser retail concessions that will be looking for a new home, its associate director Tom Royston told Place North West. 

“All of those brands in Frasers need to go somewhere and take their own stores across the city,” Royston said. 

“I think it’s an opportunity for us. There have not been any talks yet, but we would like to think that King Street is an obvious choice for some of those occupiers.”

But after a tumultuous year for retail, Royston said he is under no illusions that it may take some time to fill DTZI’s empty stores. Jigsaw, Cath Kidson, TM Lewin and Kiehl’s all shut up shop on King Street in the last twelve months as consumers turned en masse to online shopping amid the pandemic.

However, Royston said that a few vacant units have not deterred DTZI from pursuing its long-term strategy of creating a retail-led experiential destination on the Manchester street.

King Street currently suffers from high vacancy rates

“The market is facing headwinds and challenges that are quite well documented, but we can’t give up on our strategy – we have to follow through,” he said. 

DTZI started accumulating assets on King Street in 2016 and now owns 22 units – many of which are empty. As well as the aforementioned closures, the former Body Shop and Jack Wills units have been vacant for more than a year.  

Talks with a leisure operator to take the latter unit broke down last year, while the former Body Shop unit was being used as pop-up art exhibition space as part of DTZI’s ongoing mission to reactivate empty units. 

Despite changing trends, Royston said that DTZI is determined that King Street should remain underpinned by retail and that the company will not compromise on quality. 

“Rather than having an operator in the short term that is not going to add to your strategy we would rather units sat empty while we wait for the right occupier,” he said.

The former Kendal Milne building, now House of Fraser, is to be redeveloped into offices

“Demand is quite low but we don’t want an occupier that isn’t pulling people onto the street. We will be very selective.” 

More than most, DTZI can afford to be picky, even though the sustained battering that the retail sector has taken i the past year has forced many retailers into hiding. 

DTZI acts on behalf of multiple pension funds and has the security to be more relaxed about the sector’s current downturn than the majority of investors, insisted Royston.  

“Ordinarily as a property investor, you wouldn’t be able to sit there with empty units but we are looking at returns over a long period of time. It might not be profitable for us on day one but we want to create a good trading environment and increase footfall.” 

Even as retail prepares to reopen in April, the state of the high street is likely to get worse before it gets better and this will cause concern for most investors as they scramble to adapt to changing trends. As Royston says, DTZI is sticking with the strategy it drew up long before the pandemic and whether it will work remains to be seen.