UK vacancy rate stabilises in H1 but only prime retail destinations see the benefits

Retailers are cutting their losses and closing older and poor performing outlets in secondary locations, in a bid to boost sales and footfall in a continuing tough climate.

The Local Data Company (LDC) explains that, as retailers relocate to new stores in bigger and better centres and high streets, poor, secondary town centres risk becoming unsustainable as retail destinations.

According to LDC, the big, retail-owning property companies have seen solid rental growth, footfall and occupancy levels that demonstrate that prime properties are taking market share away from other locations.

The LDC believes that the more retailers come under pressure in the tough economic climate, the greater the need will be to rationalise store portfolios and look at best performing locations, at the expense of high streets and secondary centres elsewhere.

British Property Federation Liz Peace believes we must "accept that some secondary retail units are no longer viable and plan their transition to other uses."

The North/South divide also continues to widen, as town centres in the north and midlands remained the worst affected in the first half of 2011. Average vacancy rates in regions in the Midlands and north of England range from just under 13% in the East Midlands to 16% in the north west, compared to the UK average of 14%. Meanwhile, all southern regions have reported average vacancy at or below 11%.

Stockport had the highest vacancy rate of the large centres monitored, with 27.7% of its retail outlets standing empty - up 3.5% on the second half of 2010. Of the medium-sized town centres, Dudley reported a 16.1% increase in its vacancy rate for H1, reaching nearly 30%.

Meanwhile Bromley had the lowest rate of large town centres, at 9%, although this was also a 1.5% increase on the last half. Banstead, at the bottom of the table of medium centres recorded a 3.3% drop in its vacancy rate to reach just 4.8%.

LDC director Matthew Hopkinson said of the results: "This report shows how fragile the British high street is in parts of the country. The pressures it faces are increasing and therefore one needs to be realistic in one's approach to each and every one of these towns if they are all to have a future. The stark reality is that Great Britain has too many shops in the wrong locations and of the wrong size. The diversity of shop vacancy rates is clear evidence that a local approach is required that ties in with consumer needs and the realities of modern retailing. The market still has significant corrections ahead and the impact of these will vary significantly according to location."

Source: DIYWEEK.net – essential reading for the DIY trade