Vacancies Plateau at Record High
Helen Dickinson OBE, Chief Executive, British Retail Consortium:
The number of empty stores was high for the second quarter in a row. Retail parks remain resilient as the only location type that saw vacancies fall this quarter. This is because many brands who have traditionally occupied shopping centres and high streets are opening stores in out-of-town locations to meet customer demand, and retail parks have become increasingly vital for supporting the expanding online services of some businesses. Meanwhile, 10% of high street shops and more than 13% of retail units in shopping centres have remained empty for over a year, which is the result of the high costs of opening and running shops in many parts of the country.
When stores are forced to close, it not only takes away much needed jobs, but also diminishes the vibrancy of those communities. This gives retail a vital role in supporting the Government’s levelling up agenda. However, business rates pose a threat to the survival of hundreds of thousands of companies across the UK, and without reform, four-in-five retailers say they are likely or certain to close some of their stores. Government must fix this tax by cutting the burden so retailers can keep shops open and invest and grow in regions that need it the most.
Lucy Stainton, Director, Local Data Company:
With vacancy rates being one of the most robust indicators of the health of the physical retail market, it was interesting to see that this quarter the steady increase in empty shops, both pre and especially during the pandemic, have started to stabilise. Added to this, looking in more detail at the regional picture we can see that many regions are actually seeing a decrease in vacancy as the independents sector in particular returns to growth and these independent operators are taking advantage of properties being more attainable with better rental deals being offered. Interestingly, Greater London remained flat and whilst it’s certainly a positive sign that vacancy rates are no longer on an upward trajectory, equally with many people still opting to work from home, London in particular hasn’t seen a surge in new openings just yet as footfall continues to be impacted by hybrid working.
It’s certainly very welcome seeing this sharp increase in empty units slowing down, however that’s not to say there isn’t yet still a difficult period of restructuring and redevelopment ahead alongside some industry milestones such as the moratorium on commercial evictions being lifted. Added to this, will the recent announcements regarding business rates be enough, a welcome move for many but for those larger operators with more exposure in flagship locations the business case for comparatively expensive city centre units is still strained.
A return to growth for the independents sector is truly positive but somewhat offset by the challenges being faced by larger multiple retail and leisure brands, many of whom will still be exposed to a large perhaps unmanageable rates bill. Added to this, a flattening off of vacancy rates does not mean that contributing activity levels are slowing by any means. We are still seeing an incredible volume of businesses opening and closing, beneath these top-line stats, and this makes devising and implementing investment strategies whether you’re a landlord or a retailer, set against constantly shifting sands and supply side challenges, very challenging still.