Birmingham’s retail centre rents are on the rise, up four per cent to £285 per sq ft in the last year, positioning the city as the best performing centre in the West Midlands. This increase is double that of the UK average of less than two per cent (1.8 per cent) and marks the first such increase since 2008, according to Colliers International’s annual Midsummer Retail Report.
The report also reveals a rise in the number of retail centres with stable rents to 55 per cent, up ten per cent since last year, reported as the main driver behind the improving retail landscape in the West Midlands. The number of retail centres with decreasing retail rents dropped from 55 per cent in 2013 to 39 per cent in 2014, while six per cent experienced a rise compared to 2013 when there were no rental increases.
Although it’s apparent that Birmingham’s retail sector is ‘coming up for air’ after an extended period of negative growth, comparing the West Midlands’ rental growth figures (-2.3 per cent) to the national figures paints a less optimistic picture; the latest report reveals that the West Midlands is experiencing its seventh consecutive year of decline and is ranked the third worst performing region in the UK, following the South West at -3.1 per cent and Wales, which recorded the worst rental decline of -9.1 per cent.
When the region’s stats are analysed in isolation however, the reported retail rental decline of 2.3 per cent in 2014 indicates an improving picture for the region; rents are up almost three per cent versus 2013 and up almost nine per cent since they hit their lowest level of 11.1 per cent in 2009. More promisingly, the West Midlands’ 2014 figures are edging closer to pre-recession levels (-1.2 per cent recorded in 2008), reflecting the nation’s wider improved economic performance and reversing years of deepening decline during the prolonged downturn.
However, a comparison of 2014 retail rental levels with those at the start of the longest post-war recession in 2008, show that average rents in the West Midlands remain 26 per cent below pre-recession levels, at £84.1 per sq ft compared with £114.4 per sq ft in 2008.
The worst performing centres in the West Midlands are Tamworth in Staffordshire and Kidderminster in Worcestershire, retail rents in these centres dropped by 27.3 per cent to £40 per sq ft between 2013 and 2014. Other centres that performed badly include Evesham in Worcestershire, which suffered a decline of 13 per cent to £35 per sq ft, and Cannock in Staffordshire that experienced a 10 per cent drop to £45 per sq ft.
David Fox, Head of Retail Agency, Colliers International commented: “Despite the West Midlands ranking as the third worst performing region in the UK, this year marks the first signs of recovery, a trend that is being mirrored across the country. Despite this, Birmingham’s retail centre rental growth is double the national average at four per cent, making it the best performing area in the region and in the top 10% nationwide.”
The Midsummer Retail Report revealed that average prime retail rents throughout the UK rose by 1.8 per cent between 2013 and 2014 – the first such increase since 2008 – but remain 29 per cent below the levels of six years ago.