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North West suffers biggest fall in retail rents in the UK in past year, according to Colliers International

wantspacegotspace.co.uk - North West suffers biggest fall in retail rents in the UK in past year, according to Colliers InternationalMidsummer Retail Report repeats call for Government to reverse decision to postpone revaluation of business rates

The North West of England has suffered the greatest decline in retail rents in the United Kingdom in the past 12 months, according to the latest research by real estate advisors Colliers International.

Among the town centres suffering most from the wider decline of the high street is Stockport, where retail rents dropped by 25.9 per cent in the past year and by 47 per cent from £190 per sq ft to £100 per sq ft since the onset of the financial crisis in 2008.

In Southport, retail rents dropped by 16.7 per cent in the past year and by 41.2 per cent from £85 per sq ft to £50 per sq ft since the onset of the financial crisis in 2008. Bootle and Birkenhead also witnessed a significant drop in average rent since 2008 with a 28.6 per cent and 27.3 per cent decline respectively. Liverpool saw a 17.2 per cent fall over the same period.

In the North West as a whole, retail rents declined by 5.5 per cent in the past year and by 18 per cent from an average of £108 per sq ft to £88 per sq ft since 2008.

The Midsummer Retail Report (MSRR) by Colliers International repeats a call it made in 2012 for the Government to reverse its decision to postpone a revaluation of business rates from 2015 to 2017.

Colliers believes that the postponement – which means retailers and other businesses continue to pay rates based on pre-recession property values – could decimate what it had dubbed “terminal towns” such as Rochdale, Barrow-in-Furness and Whitehaven, Cumbria.

Despite the decline of retail rents in the North West in the past year, the region performed relatively strongly when compared to the rest of Great Britain over the past five years.

The worst performances since 2008 were registered by Wales and the North East of England where rents collapsed by 31 per cent, followed by the West Midlands, down by 25 per cent and the whole of the Midlands and the South West, where rental levels slipped by 23 per cent over the same period.

The only parts of the United Kingdom to record a rise in retail rents were central London and all of London, which recorded increases of 15 per cent and 11 per cent respectively since 2008. The weighted average for UK retail rents showed a fall of 15 per cent, according to the MSRR.

Colliers International reported that about 55 million sq ft of retail space was vacant in the UK – representing some 12 per cent on total non-food floor space and almost double the amount that stood empty in 2006.

The MSRR revealed that vacancy rates were “very polarised” with prime locations in major regional shopping centres such as Manchester and Liverpool outperforming secondary locations in those centres with vacancy rates of just six per cent and up to 17 per cent respectively.

The report cited the Trafford Centre as a classic example of a strongly performing prime location in a major regional centre – it said vacancy rates at such centres ranged from two per cent to five per cent.

Colliers International forecasted that the high street would see a gradual recovery by 2020 with the overall vacancy rate falling from 12 per cent to about 7 per cent – taking it back to the level seen in the pre-financial crisis year of 2006.

But it warned that the recovery would be “selective” – with major retail centres enjoying the largest decline in vacancy rates and medium-sized shopping centres seeing the least.

The MSRR said that the recovery would be driven primarily by a rise in the UK population of about 3.3 million and modest economic growth encouraging consumers to loosen their purse strings.

It predicted internet sales – cited by economists as a major reason for the decline in traditional bricks and mortar stores and which currently represent about 13 per cent of non-food spending – would increase to about 20 per cent of such expenditure by 2020.

The report said there would be negligible growth in new shopping centres between now and 2020 but that a new wave of developments could begin in or after that year.

Tom Cullen, director, retail at Colliers International said the major reasons for failing towns were reduced consumer spending because of the prolonged economic downturn, excessive competition and retail over-development.

But he added that the Government had to shoulder much of the blame for failing to address the issue of declining high streets since the issue first arose in 2008.

Tom said: “The decision of Government to delay the rates revaluation has left a massive burden on those high streets where decline has been the greatest and we call on the Government to introduce a revaluation now.

“We’re in a position where central London shops are effectively being subsidised by those in Wales and the North East of England.”

Other key issues affecting the high street on which the Government had failed to deliver included an effective control of retail development and a lack of flexible ‘change of use’ legislation and local government should have reduced car parking charges in failing town centres, been more flexible in the change of use of shops and brought retail stakeholders together.

The MSRR proposed a selection of solutions to address the decline in the nation’s high streets including:

•    a rating revaluation
•    rates relief in town centres where the shop vacancy rates was above the average of 12 per cent;
•    reduced or more flexible parking charges;
•    the employment of Town Centre Managers;
•    a five-year business plan;
•    the use of Compulsory Purchase Powers for measures such as the demolition of shops and the acquisition of retail units to be let on flexible terms;
•    recreating town centres as a ‘destination’ with crowd-pulling events

The report concluded: “The high street is not dead – it is however, almost fatally wounded in some locations where intensive care is required.”

Posted by The Editor (wantspacegotspace) on 8th July 2013 (updated 13/07/2013)

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