Insight: vacancy rates on retail parks remain static despite store closures
A new study has found that vacancy rates for retail warehouse space in the UK remain at their lowest level in 12 years.
The research from retail property research consultancy Trevor Wood Associates shows that rates have remained at 5.9% from Q4 2015 to Q2 2016 and are anticipated to drop further by the end of the year, despite store closures from B&Q, Brantano and BHS.
Trevor Wood explained: “Since the recent peak of 10.0% in mid 2013, the retail warehousing vacancy rate continued to reduce for the next two years despite disposals, relocations and downsizing by retailers. By the end of 2015 the retail warehousing vacancy rate (including both free-standing units and parks) had fallen from 6.4% to 5.9%.
“By mid 2016 we have recorded almost identical floorspace figures, so the rate remains at 5.9%. We have, however, seen some changes by planning consent and have calculated the Open A1 vacancy rate as 4.7%, compared to 4.9% at the end of 2015, with Open Non Food units remaining at 5.9% and other units rising from 6.3% to 6.4% in 2016.
“Since the date of this analysis, July 2016, the administrators for BHS closed all remaining units and there have been other store closures. We understand from our clients and others within the industry that a number of units, totalling more than one million square feet, are currently under offer and we are of the opinion that the end-year figures will fall once again.”
The company also found that Northern Ireland, the North West and Yorkshire & Humberside were the regions seeing the biggest reduction in space. In contrast, five regions showed an increase over the past six months, primarily as a result of the Brantano administration and store closures by both B&Q and Currys/PC World. These included East Anglia, the North, Scotland, Wales and the West Midlands.
Despite this, East Anglia continues to have the lowest vacancy rate in the UK at just 3.1% and Northern Ireland the highest at 9.6%.
The top three direct property owners within the retail park market at the end of Q2 2016 were British Land, Hammerson and the Crown Estate, which has replaced Land Securities in third position. B&Q, Currys and Homebase remain the top three occupiers, despite reductions of between 0.9% and 3.8% in total floor area.
Wood added: “Despite continued administrations, receiverships and store closures for some retailers, a significant amount of space on retail parks has been taken by expanding retailers. The fastest growing tenants include Poundland, Tapi, Poundworld and The Range.”
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