Muji eyes House of Fraser flagship, is in talks on sub-let deal for basement
today May 25, 2018
The House of Fraser plan to downsize its store numbers and rationalise its remaining space looks like it will be going to the heart of its operation with even its Oxford Street, London flagship not immune.
And Muji could be the one to benefit. News emerged on Friday that House of Fraser is in talks with Muji to sub-let part of the Oxford Street flagship to the Japanese lifestyle retailer.
Property Week reported that the Department store could sub-let up to 20,000 sq ft in its basement area to Muji. That would mean the women's footwear department being displaced as that currently occupies the basement space and has its own entrance at street level.
While that may come as a surprise, given the importance of Oxford Street as London's premier shopping thoroughfare, it does make commercial sense. We heard earlier that the giant flagship saw its rateable value, which is used to calculate the tax due, rise from less than £6 million to £9 million in the latest year. That means HoF would pay an estimated almost-£19 million in business property taxes until the next revaluation cycle in 2021. This year alone the location’s business property tax will rise by £1.66 million.
And the company has also suffered from falling visitor traffic to the store. A deal of this kind would help generate extra revenue and also, hopefully, bring new customers into the store.
The trade paper said that the company isn't using property agents in the talks that are going on directly between management of the chain’s Chinese parent company and Muji management in Japan.
And House of Fraser is reported to be in other sub-let negotiations, even though its preferred option is to negotiate an exit from underperforming stores.
Muji currently has 12 UK stores with nine of them in London and one on Oxford Street. There is also another nearby on Carnaby Street. Taking the space at the House of Fraser store would allow it to add more product categories than are available its existing locations.
The strategy for multiple Oxford Street neighbourhood locations appears to have been a success for a number of other major chains, including Zara, H&M, & Other Stories, and Gap.
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