Skip to main content Skip to footer

‘Brutal’ transition in UK retail means one in three premises are ‘zombie shops’

alt=""

Colliers’ Midsummer Retail Report shows that UK retail property void levels are higher than reported


As many as one on three UK retail premises are now ‘zombie shops’ that are either vacant, or not producing income, or occupied on only a short term basis.
Analysis from commercial property specialist Colliers in its latest Midsummer Retail Report has revealed the scale of the impact of the pandemic and changing shopping habits upon the sector.

The annual report looks at trends across retailing and their impact on the property market which supports UK shopping. Whilst a growing number of retailers are taking advantage of reduced rents - which have fallen by as much as 50% since their peak in the noughties - to access new and better trading positions, the report also details the ‘brutal’ transition that is taking place.

Colliers’ Head of UK Retail, David Fox, observes: “Notwithstanding the best efforts of the Government, the ‘surgery’ that UK retail continues to undergo is brutal and that has been vividly illustrated throughout the property market which it supports. 

“There’s consensus that UK retail property void levels are around 15% but if you also take into account the stores that are let on flexible agreements, post-CVA terms etc then the real void rate must be double that. 

“So, we would estimate that around 1-in-3 shops in the UK are either vacant, not income-producing or occupied on very short-term arrangements.”

However, the Colliers Midsummer Retail Report also highlights positives for the retail sector, noting that the record level of UK household saving in 2020 - which totalled over £200 billion above the long-term average - is now being spent as people become more confident that the end of the pandemic is in sight and that the economy will move forward again. 

Brands target London for ‘once-in-a-generation opportunity’

For London, these changes in the retail landscape do hold some opportunities. Despite suffering from the lack of tourism and thousands of workers working from home, a growing number of brands are taking the chance to lease property in the capital, which is being offered on attractive terms and in prime locations where space is usually scarce.

Paul Souber – Colliers’ Head of London Retail Agency – comments: “What we’re seeing is occupiers realising that there’s a once-in-a-generation opportunity to establish themselves in London on very attractive terms with rebased rents. We’re currently tracking active requirements in the market which equate to around two million sq ft of space."

Government must structure support

With lockdown restrictions extended until 19 July and the commercial eviction moratorium extended to March of next year, Colliers is calling on the Government to do more to reconcile the interests of landlords and occupiers. 

David Fox comments: “The extension of the commercial eviction moratorium means there will have been a two-year pause on landlords’ ability to collect rent from their tenants. By any measure, that’s an extraordinary length of time for businesses to be rendered unable to function effectively.

“Of course, lockdown has been an equal challenge to tenants and the pandemic has demonstrated in the loss of jobs and livelihoods just how very important the retail and leisure sector is to the economy and wider society. The moratorium extension has been generally welcomed by various representative bodies across the sector, but it will also give further wriggle room for those tenants who have taken advantage of the situation. 

“This will make it even harder for many business owners who are facing their own continuing crisis to have a sensible dialogue with these tenants.

“Whilst free market economics must be allowed to be the driving force of changes in the industry, thoughtful legislation and regulation would allow breathing space so businesses can assess options, adjust business models and seek investment for stabilisation - and even opportunities for growth in a rebooted market.”

Download the Midsummer Retail Report here


Related Experts

David Fox

Co-Head of Retail Agency

London - West End

 I am a former partner at BCL and have specialised in retail property in the Midlands ,North ,Scotland and Northern Ireland throughout my career.
Within my role as Co Head of UK Retail Agency  I have responsibility for our retail coverage in Birmingham,Leeds ,Manchester ,Glasgow and Edinburgh , and continue to build relationships with new and existing clients. 

Over my career I have advised a wide number of retail occupiers in their proprty strategies including DixonsCarphone, Boux Avenue , Hotel Chocolat , Costa and  Oliver Bonas.

I have advised a  range of investors , institutions and property companies in respect of their assets across the country , including shopping centres, high streets , transport hubs and retail parks. 

In an ever changing market  my experience has extended into asset management roles in respect of compromised shopping centres on behalf of recovery specialists and  lenders. The repurposing and regeneration of town centres and shopping centres  is an area of particular interest and  the focus of my team and colleagues.  as our industry rises to the challenge     set by change.

 

 

View expert

Dan Simms

Co-Head of Retail Agency

London - West End

With over 28 years experience in the retail market, Dan is the Co-Head of the UK Retail Agency team at Colliers.

Dan & the team provide specialist advice on leasing Shopping Centre, High Street & Out of Town property and facilitating large scale repurposing projects all across the UK for leading landlords including Landsec, Hermes, Legal & General, Canada Life, Axa, Aviva, Aberdeen Standard, Invesco and NewRiver.

Dan & the team also advise a large number of leading and emerging retailers, including Dixons Carphone, Oliver Bonas, Fraser Hart Jewellers, Sky, iSmash, Superdrug, Vodafone, Santander, Savers & Boux Avenue on their acquisition and disposal programmes and store portfolio strategies.

The Colliers UK Retail Agency team is one of the most active and successful agency teams in the UK retail market and advises on over 800 retail & leisure deals every year right across the UK.

These deals are well balanced between advising occupiers and landlords – this ensures we have an excellent perspective on both sides of the market.

Dan has regularly commented on the retail market in national media including BBC News, Newsnight, LBC, BBC Radio 4, The FT, CNBC, The Evening Standard, The Guardian, The Times, TalkRadio and most property media channels. 

 

View expert

Paul Souber

Co- Head UK & EMEA Retail

London - West End

Paul Souber is a highly experienced London retail property expert, and has a particular specialism in the luxury sector.

He advises major London landlords – including The Crown Estate, Grosvenor, The Church Commissioners and Shaftesbury Plc – on how their retail holdings in the capital can be enhanced through leasing and placemaking.

His consultancy also involves advising various leading brands on their property strategy and sourcing the stores which best serve their strategic needs.

During a career in which he has advised on the leasing of more than 1.5m sq. ft. of shopping space, Paul has worked with clients including Yves St Laurent, Roksanda Ilincic, Gina Shoes, Balenciaga, Oliver Bonas, Boux Avenue, Sweaty Betty and Headmasters.

He is Head of London Retail Agency and Co Head of the EMEA Retail Team at Colliers International

View expert

Walter Boettcher

Head of Research and Economics

London - West End

I am the the Chief Economist at global property advisors Colliers International based in London.  I am a research economist identifying timely research topics and directing research and forecasting outputs.

I have over 20 years UK and European property industry experience and extensive expertise across a wide range of property sectors and related industries.

I participate regularly in industry panel discussions, but am focused more on direct client engagement with institutions, property companies, banks, and private investors. A regular media commentator, I have a wide range of national and broadcast experience.

I joined Colliers International in August 2007 after several years at a private property company where he was responsible for managing a mixed portfolio of London residential, retail and office assets.

Previously, I worked in a few London property advisory firms, a geodemographic company as well as a few youthful sojourns in the US offshore oil industry, local government and entertainment business.

I am an economics graduate of the University of Texas at Austin and received his PhD from the Faculty of Science at University College London.  I am a member of Lambda Alpha International and the Society of Property Researchers.

Perhaps best known for my alternative take on property economics and investment, I am a keen proponent of UK regional development and infrastructure investment.

View expert

Rebecca Allen

PR Manager

London - West End

I have been working in commercial property communications for over seven years having previously worked at CBRE and most recently Savills.

In my role at Colliers I am responsible for the PR of national capital markets, London agency and capital markets teams and investment property management.

My role includes:

  • Creating and exectuing PR plans for business lines that span press, marketing and digital channels
  • Media monitoring and reporting
  • Journalist relationship building through face to face meetings, phone calls day to day assistance with stories
  • Reputation management of the Colliers brand

 

 

View expert