Property News Research & Forecasting Paper

National Retail Barometer

Colliers International’s seventh National Retail Barometer research report, which uses void rates as a key indicator, reveals a fall in the proportion of vacant retail units and floorspace during the six months to October 2011.

The report shows that UK retail vacancy rates have fallen for a third consecutive half year, although they remain well ahead of pre-recession levels.

At October 2011, 12.7% of units across the sample of 15 towns and cities were empty, down from 13.3% last April.

  • In terms of floorspace, retail vacancy is lower and falling faster; at October 2011 9.0% of floorspace was vacant compared to 9.7% six months earlier
  • The polarisation between prime and secondary continues; prime space appears to let well but the vacancy rate for secondary stock remains high
  • The market is difficult to call. Retail sales (ONS figures) for December and January were stronger than forecast, yet anecdotal evidence and economic data paint a bleaker picture. On balance, there is every possibility that vacancy rates will be higher at our next (April 2012) survey date.

Colliers International commented:

“The overall amount of vacant floorspace in our sample of towns has risen by 570,000 sq ft, or just over 51%, in five years. However, over the same period total retail floorspace stock increased by 1,421,000 sq ft or 8% (adding in new development and subtracting demolitions). Therefore, the total occupied retail floorspace actually increased by 851,000 sq ft (or 5%) through the recession. Although our sample does include a couple of major shopping centre openings, the headline vacancy rates do tend to mask the broader picture which is not as negative.

“Although inflation is set to fall through the course of this year, muted wage growth and rising unemployment will ensure that household disposable income remains under considerable pressure. It is therefore likely that retail sales will remain subdued and retailers will face a tough 12 months, with a 5.6% rise in business rates in April a further blow. As a consequence, the downward trajectory of retail vacancy through 2010 and 2011 could end and void rates may increase once more – the void equivalent of a ‘double dip’.”

Glasgow