A gathering storm for retail vacancy rates
Published: 23 September, 2010
New data shows retail vacancy rates are still on the increase, and the north of the country is suffering more than the south
New research by The Local Data Company has found that town centre vacancy rates in Great Britain have risen from just over 12 per cent at the end of 2009 to 13 per cent at the end of June 2010. Of the 63 centres analysed, only ten have improved in the last six months.
Large cities in the North and the Midlands are faring the worst. Watford, Bristol and Reading were the only three southern places featured in the top 25 worst affected large town centres. And Bristol has half the vacancy rate of Blackpool – where 30 per cent of shop units are empty.
Of the medium-sized town centres the North/South divide is less obvious with Margate, Brixton and Wandsworth featuring in the top half of the table.
Describing the situation as a “gathering storm” LDC’s business development manager, Matthew Hopkinson, predicted more chain failures and unemployment and cited the impact of national policy and the rise of the internet as things to look out for as well as possible changes in retail costs.
But Mark Stirling, retail director at Metric Property Investments thinks there are still many retailers looking to take smaller units out of town, and said: “If you have the right space and the right location people will pay the price you want.
“People need to look at the landlord/retailer relationship – landlords and tenants have got to be creative together. Understanding customers is absolutely key.”
And Stirling thinks that the traditional shopping centre model, with large anchor stores paying low rents for high footfall, might change with several smaller anchor stores appearing instead.
Equally Hopkinson stressed the importance of leisure to the new shopping centre mix. “Leisure as well as food has an important part to play as market conditions change,” he said. “The leisure experience will encourage the customers to stay where the shops are for longer.”
Mark Bowles is property director at HMV. He thinks that the future will bring fewer but bigger and better stores with a more cost-effective, multi-branded offer. He also believes that the number of pop-up shops will increase.
“HMV opened ten pop-up stores on the high street before Christmas,” he said. “It gave us a low-cost opportunity to test the market and five of those stores are now trading permanently.
Bowles also thinks that lease lengths will get shorter and be more flexible. “Deals have become a lot more attractive and we need to continue to build on this and the relationships with landlords,” he said.
“Landlords need to find retailers who are willing to take space on any terms and get them over rival centres.”
Martin Carr, retail specialist at Ernst & Young’s transactions and reconstructing advisory team, warned that retailers won’t fill the gaps as fast as they are appearing but thinks that specialists like Jessops and Blacks will continue to do well because they can offer expertise.
But Matthew Hopkinson urged people to remember that every centre is different. Whereas vacancy rates in places like Bradford, Leeds, Northampton, Warrington and Stockton have gone up, conditions in places like Liverpool, Cardiff, Swansea, Wimbledon, and Central London have improved.
Liz Peace, chief executive of the British Property Federation, concluded: “It is encouraging to see high streets recovering in the South, but that glimmer of positive news does not hide the fact that retail markets elsewhere are struggling, and that consumer confidence is still fragile.
“Filling empty shops will never be easy or quick. Both banks and landlords need to show a proactive approach to managing property, while local authorities have a key role to play in promoting flexibility and innovation in areas suffering from a high number of vacancies.”
