Murder On The Dance Floor: Real Estate And Operators Work To Reinvent The Nightclub Industry

Once the heartbeat of Britain's late-night economy, the nightclub industry has been in steep decline across the UK for the past decade. Rising operational costs, national insurance hikes and changing consumer habits, plus the long tail of the pandemic, have closed the dance floors at many iconic venues — and left real estate owners with voids to fill.

Nightclub operators have responded, changing ownership models and their proposition to broaden their appeal, offering an opportunity for real estate investors to pick up properties suitable for the next generation of late-night winners. But with challenges mounting, could 2025 be remembered as the year the music died?

“It’s very tough to see a way forward for a lot of traditional nightclubs which have been hit by rising operational costs, national insurance and business rates,” Broadwick Group CEO Simon Tracey said, adding that his venue operator has increasingly worked with landlords and turned to hybrid and multifunction locations.

In 2013, the UK had 1,700 nightclubs, but by last summer there were just 787, according to figures from CGA by NIQ and AlixPartners. Quarterly monitors produced by the Night Time Industries Association have continued to show a net contraction in venues and a slowdown in revenue growth across nighttime hospitality. 

The NTIA estimates the value of the nighttime economy at about £153B in an industry that employs more than 2 million people and is one of the biggest employers of 18-to-30-year-olds.

The UK’s nightclub scene is dominated by a handful of large operators. Neos Hospitality is expanding again after divesting around half its venues last year, Novus Leisure has 40 to 50 late-night bars and clubs, Tokyo Industries has a diverse portfolio of 30 to 40 venues across northern England, blending superclubs with live music spaces and themed bars, and the Scotsman Group operates more than 50 Scottish hospitality venues.

Many operators, which typically lease their venues, and landlords looking to preserve the leisure use of buildings are adapting programming, diversifying the offer and leaning into hybrid models. Others have applied for a change of use, with gyms and childcare facilities often mopping up excess space. 

“The owners in the sector have proven very entrepreneurial and adaptable, and they are constantly looking at ways to flex their buildings,” Tracey said.

“With our big venues, we’re using them for everything from corporate events and meetings to electronic music venues, where people watch the DJs playing. It’s the only way to be viable. But our concern is that the DJs capable of playing big venues need to cut their teeth in smaller places first, and they are dying out.”

Broadwick has been supporting lobbying by the NTIA to get the wider importance of the industry recognised.

“The current challenges are primarily around costs,” NTIA CEO Michael Kill said.

People have less disposable income, and there are environmental impacts to consider like transport after midnight within cities and towns, which can be poor outside of London; safety after midnight, particularly for women; and concerns around regulatory frameworks. 

Kill said the venues that are surviving are those that are multifaceted and versatile, but such an approach takes capital. 

“We are seeing premidnight club shows, soft clubbing, which is about listening to music within a more holistic and health-driven environment,” he said. “We call that light clubbing and then full-fat clubbing on the weekend that takes you through to the early hours.”

“Going to a nightclub, paying to get in and then £10 for a drink, that model doesn't necessarily work,” Cushman & Wakefield Head of London Leisure and Restaurants Matt Ashman said, adding that the agent is working with major landlords such as The Crown Estate, Battersea Power Station and Covent Garden on this shift and the move toward earlier evening socialising and dining. 

For large real estate owners, there is a balance to be struck when it comes to clubs. Embracing the sector can bring in revenue and give a large scheme a buzz the whole day around. But especially where there are residents involved, clubs and clubbers are not always totally welcome. 

“Developing our nighttime economy at Battersea is something we’re actively looking at, especially how we create more date night experiences,” Battersea Power Station Development Company Leasing Director Harriett Renny said. “But obviously, we have to balance that with the fact that we have a lot of residences around the site and we need to be sensitive to them.

“But as nightclubs evolve and if young people are more interested in the music than in drinking, then that’s something that would be interesting to us.”

Reinvention has not come soon enough for some. There have been some high-profile industry casualties, not least the roller coaster ride at what was the UK’s biggest group. In 2011, Luminar collapsed into administration and was rescued in a £45M deal before, in 2015, it renamed as Deltic, dumping its Liquid and Lava & Ignite brands but retaining its Oceana and Pryzm operations.

Renamed Rekom UK, a division of Danish multinational Rekom Group, it collapsed in 2024, and nearly half of its venues have since closed as the division unwound from its parent company and rebranded as Neos Hospitality under the ownership of a Danish family.

Neos CEO Russell Quelch, backed by a £25M investment, has shifted from larger clubbing venues toward party bars, investing in brands such as Bonnie Rogues Pub and the après-ski-themed Barbara’s Bier Haus and with an aggressive expansion plan to double sites from 19 to 38 by the end of this year.

“We’re investing in the bar sector because that’s where the growth is. What people want out of a night out has changed, and the world’s moving at a pace that you constantly need to have your finger on the pulse,” Quelch said of the rebrand.

However, Savills Head of Licensed Leisure Kevin Marsh said repurposing existing nightclubs is highly dependent on the type of building. Large warehouse-type properties tend to be easier to convert, especially to uses like retail warehouses, gyms and children’s play facilities.

“We have seen the likes of the O2 group buy up venues such as the O2 Academy in Bournemouth, which is now primarily operated as a music venue,” Marsh said. “We are also seeing conversion of nightclub sites to make them more financially robust. A good example is Epic Bars & Clubs' reinvention of Chapel in Salisbury, where the operator has added a garden with food trucks, a bar and a canopy for when the weather is good.”

Larger landlords are also looking at how they can work with new operators to develop their late-evening trade. Competitive socialising venues, cocktail bars, themed bars and craft bars are in many ways replacing traditional clubs.

Cushman's Ashman said there has been an emergence of higher-quality nighttime locations and more immersive entertainment, including Nightcap Group's approximately 45 themed and cocktail bars and The Little Yellow Door's five London cocktail bars.

“Then bigger groups like Bristol-based Broadway Live and The Venue Group have also created really good venues with dining, drinking, full entertainment,” he said.

The bottom line for landlords is that nighttime activity is alive and well, but the traditional high street club is giving way to a host of different leisure and alternative uses.

“The number of nightclub operators has been shrinking, but a lot has changed,” Ashman said. “Clubs are becoming more multifunction event spaces, more spreadsheet than entrepreneur-based.”