Shop vacancy rates could rise to new high
The British Council of Shopping Centres has predicted that more than one in ten UK stores could remain vacant in the long term.
The organisation thinks that vacant units will peak at a new high of 13-14% in the immediate future, before falling to around 11% in the long run. This compares to an average vacancy rate of 6-7% before 2007 according to retail property organisation BCSC’s latest report.
The research considered factors such as demographic change, the rise of internet retailing, and the expansion of supermarket chains as key drivers for rising retail vacancies, in addition to the current difficult economic climate. The BCSC said that the growth of shopping centre space since the 1980s, with tenancies on longer 25 year leases, had also added to the problem.
In response to the report’s findings, BCSC is calling on communities, businesses and local government to be creative in generating new ways of utilising empty space.
Richard Akers, BCSC President and Managing Director for Retail at Land Securities commented: “Boarded up shops are the most prominent symptom of the plight of some town centres, the state of which has been magnified by a number of high-profile reports in recent weeks, and of course by Mary Portas' appointment by Government.
“The problem, whilst clearly exacerbated by the economic downturn, is a structural one, and with this research we’re hoping to move the debate on to focus on how we can bring unoccupied retail space back into use in the long-term, or put it to alternative uses.”
The report calls for Government to make a strong commitment to town centres as a focus for investment as part of the proposed National Planning Policy Framework, and argues the business rates regime acts as a barrier to retail growth.
Akers continued: “UK business rates must be urgently reviewed if retail businesses are to survive and compete with rising online sales on an even footing. Likewise, the imposition of empty rates on even the smallest properties is hindering owners’ investment in their properties, and therefore their ability to work with town centre managers in developing centres that meet residents' needs."
The BCSC has suggested that some town centres could benefit from a reduction in the total amount of retail space, particularly where the units are small, old-fashioned and or poorly configured. However, it argues this should be part of a carefully managed strategy to provide a mix of property types, and be consistent with local plans.
BCSC Chief Executive Michael Green called for closer collaboration between stakeholders to share advice and work together to provide vibrant town centres: “Above all, leadership is needed to make sure that town centres continue to be relevant and attractive to consumers.
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