Figures recently released by the Local Data Company reveal 48,000 empty retail units in the UK in 2011, a figure which equates to 14.3% of all shops on the high street, in retail parks and shopping centres. This is predicted to rise further in the next couple of years with weak consumer confidence, rising unemployment and growing online sales and some of the more familiar names scaling back operations.
The British Retail Consortium has called on the Government to assist by cutting business rates and the figures make for interesting reading when compared to those of 2008 which saw just 5.5% of units vacant. Whilst there can be little doubt that the switch to internet shopping will have hit many high streets, the figures do point to certain regional discrepancies. Vacancy rates in Blackburn (27.8%) and Blackpool (26.6%) remain worryingly high whilst Stockport takes the unenviable umber one spot for empty units with more than 30%. However, areas such as Cambridge (6.4%) performed well and in the North-West both Ormskirk (7.5%) and Lytham (5%) should be praised for buoyant occupancy rates.
The next 2 to 3 years are of critical importance to the long-term health of the UK high street; research by property consultancy Jones Lang LaSalle predicts that with a huge number of retail leases up for renewal, the vacancy rates could hit 50% within three years. Whilst this may seem at first instance to be doom-mongering, some analysts predict that companies such as Arcadia, Mothercare, New Look and Thorntons are on the brink of cutting their rental expenditure by announcing the closure of various stores as shop leases near expiry.
It remains to be seen whether the proposals put forward by the coalition’s high street guru Mary Portas prove a success. The announcement by Grant Shapps last week for twelve towns to bid to become “Portas pilots’ will at least allow for the recommendations to be put into practice and reviewed; but any success will obviously be confined to the lucky dozen. With the number of available units set to steadily increase, landlords should expect retail tenants close to renewal to demand a reduced rent to remain in occupation.