The level of empty shops has decreased during the first half of the year, with 47 per cent of locations witnessing a decline – a figure that has not been bettered for almost two years, since October 2011. That’s the message behind Colliers International’s latest National Retail Barometer for Q2 2013, which reveals that the proportion of vacant shop units has fallen to 16.1%, down from 16.3% peak recorded in October 2012. The floorspace vacancy rate also fell to 12.4% in April 2013 from 13.2% in October 2012.
However, the ‘gap’ between UK and Central London empty shops continues to widen and now stands at 13.7%, a new peak in Colliers International’s voids data. Mark Charlton, Head of UK Research and Forecasting at Colliers International said: “The gap between UK and Central London void rates this quarter reached the highest levels since 2008, widening from 1.9% in January 2007 to 13.7% in July 2013. Colliers’ data in this sphere shows an upward trend since the collapse of Woolworths in 2008, the first major retail administration following the downturn. This shows, the combined impact of portfolio rationalisation and retailer administrations has a disproportionate impact geographically, with London benefiting from a broad cross section of international and domestic retailer demand. ”
Despite a decrease in void rates, the total number of prime empty shops reached its highest for three years in the last quarter, indicating that the recent raft of retailer administrations is taking its toll on prime unit stock. The number of empty shops as a percentage of total units for prime retail has risen since 2012, and now sits at 10.3%, with prime floorspace at 6.5%. This indicates that the size of the average prime unit on our high street is still not meeting retailer demands. Retailer administrations continue to be the impetus behind void rates – the last six month period saw 600 stores close.
The average size of vacant units has fallen by 5.1% to 2,162 sq ft in the first half of the year, a reversal of the general trend of recent years. The six months to April 2013 saw substantial changes in the size of the average vacant units across our sample towns. Whilst Cardiff city centre and London’s West End saw the strongest growth in average unit size, growing at 33% and 30% respectively, now above the 3,000 sq ft mark, two thirds of towns witnessed a decline in average unit size. The Metrocentre in Gateshead witnessed the steepest decline at 44%, although Plymouth city centre still holds the highest average vacant unit size at 3,763 sq ft. With demand for larger prime unit stock still high, the onus now lies with landlords to reconfigure or join units to provide the type of larger premises sought by a range of expansive retailers.
“Headline growth masks an underlying divergence; food stores continue to pass on increased costs, while non-food stores and non-store retailers continue to discount, meaning that high street retailers, who arguably carry the heaviest cost burdens, continue to feel the squeeze. It is the total cost burden that allows only the retailers with a healthy financial standing to increase their presence on the high street and, with online retail now becoming firmly embedded into consumer shopping habits, expect future bricks and mortar growth strategy to remain focussed around key centres,” Mark Charlton said.