Too many shops?
New data from the Local Data Company highlights the regional differences in shop vacancies across the UK, with the average vacancy rate for London and the South at 12.7% while Wales, the Midlands and the North have an average of 18.5%, and Scotland 16.7%. The North West is the worst performing region with 20.1%. Vacancy rates have risen in all regions during the past 12 months, LDC says, apart from London where the rate has fallen to 10.1% from 10.7%.
The LDC’s report, called ‘Too many shops’, outlines the factors that have led to rising vacancy rates, including a drop in consumer spending to 2002 levels and the acceleration in online sales. It says the ‘new reality’ is here to stay – weak growth, rising costs, reduced returns for investors and a lack of growth in consumer expenditure. Almost 15,000 shops closed in town centres during 2000-2009 but a further 10,000 closed in 2010 and 2011, it notes.
The report says the difficulties in the retail sector have been exacerbated by the rising volume of retail space, which has further diluted the profitability of the retail estate. This has been most marked in regions such as the North West, it says, where record volumes of retail space were created from 2005 onwards, despite the decline in real disposable income. “It is no surprise that average vacancy rates in the region are in the high teens with shopping centres faring even worse – even vacancy on retail parks is twice the national average,” LDC notes.
The report has calculated a real sales density for each region using floorspace data from the VOA and annual deflated gross household disposable income figures. It says the only region where real sales densities have improved since 2002 is London – they fell in real terms in every other region, and the worst performing regions were the East Midlands, the North West and Wales.
With the prospect of high vacancy levels continuing for some time, this eventually brings forward the prospect of alternative uses for the vacant retail space, LDC says.
The latest shop vacancy data indicates that the worst performing large retail centre overall is Nottingham, with a vacancy rate above 30%, followed by Walsall (29.6%) and Stockport (28.4%). All the top ten poor performing centres are in Wales, the Midlands or the North. The best performing large centres are topped by Salisbury at 7.7%, followed by Cambridge and Chesterfield.
Among medium-sized centres (200-399 shops) the worst performer is Dudley with a vacancy rate of 32.4%, followed by Dartford with 30.8%. The best performers are East Ham and Stamford, each with 5.1%.
Margate remains the worst performing small centre (50-199 shops) with a rate of 36.5%, followed by Fratton (31%) and Cheetham (30.1%). There are several small centres with vacancy rates below 5%, including Reigate, Epping, Rickmansworth and Lincoln Eastgate.
