The Colliers International Midsummer Retail Report shows that average UK prime rents have risen by 1.9% during the past 12 months. However, they are still on average 12% lower than their pre-recession levels.
Mark Phillipson, Head of Retail at Colliers International, commented: “This is an encouraging sign of increased retailer confidence being reflected in the property market but there is still a long way to go before we are close to a fully functioning market with progressive rents.
“There is clear stabilisation taking place: of the 400+ UK locations in which we analyse rental data, the number of centres with falling rents declined to 21% - a figure not bettered since 2008.”
The London retail scene is a powerful driver behind the recent uplift in average prime rents. Five of the top six performing locations were in Central London where average prime rents rose by 11.6%.
With an improved economic environment and increased consumer confidence, Colliers is forecasting further rental growth.
Mark Phillipson reports: “We expect rental growth in shopping centres and shops outside Central London to remain comparatively sluggish this year as high vacancy rates restrict growth. However, vacancy is declining: our aggregate vacancy rate for shops outside Central London stands at 15.1% having fallen from the 16.3% peak recorded in October 2012.
“We expect the steady absorption of existing space to drive a modest acceleration in rental growth from next year onwards, averaging 1.9% in retail warehouses, 1.4% in shopping centres and 1.3% in shops outside Central London.”