Retail vacancies to climb further – LDC
At this stage, with the economy recovering from recession, it would be normal to expect retailing to be in good health, says the Local Data Company. “However, the ‘patient’ seems more fragile than had been hoped and the treatment regime includes some nasty medicine in 2011”, the company says in its year-end review of shop vacancy levels in the UK. And the report goes on to say that the data contained within it suggests that the “aggressive regime prescribed” might end up damaging the sector, rather than curing it of its ills.
The report outlines the nasty medicine: VAT has already gone up; in April the rate relief on empty properties will be abolished; and the public-sector spending cuts will also bite, with the worst to be felt in Northern cities and those around the fringes of the SouthEast, it warns. Vacancy rates are already much higher away from London and the South East. Of the top 25 highest vacancy large towns identified in the report, 90% are in the Midlands or the North; the equivalent figure for medium-sized towns is 68% and, for small towns, 44%. “The uncomfortable fact is that vacancy is rising across the board in a period of supposed recovery in demand,” the LDC report notes.
The five large centres (over 400 shops inside the town centre boundary) with the highest vacancies are Rotherham (vacancy rate 28.2%), Walsall (26.8%), Sheffield (26.8%), Blackpool (26.6%) and Grimsby (26.4%). Watford is the only large centre from the SouthEast in the top 20 – it is in 19th position with a vacancy rate of 20.4%. And among the top 25 large centres for vacancies, only Blackpool has seen a decline in its vacancy rate since last year (-2.3%).
Among medium-sized retail centres (200-399 shops) more than half of the top 20 towns ranked by vacancy level are in the North. Dunstable (26.6%) is the highest-placed Southern town, in 6th place. The top five are Morecambe (30.0%), Altrincham (29.0%), Newport (28.8%), Stockton-on-Tees (28.7%) and Dewsbury (28.3%). All the top 25 medium-sixed centres saw an increase in vacancy rates year-on-year.
There is a greater mix of North and South among the smaller centres (fewer than 200 shops), where the top five are Margate (37.4%), Leigh Park (36.7%), Lee Green (34.4%), Runcorn (30.2%) and St. Austell (29.8%).
LDC says there is plenty of data to indicate that vacancy levels will rise further in 2011. It cites the recent Red Flag Alert report from Begbies Traynor, which says around 10,250 companies in the retail sector are facing financial distress and the forecast from the Centre for Retail Research that around 10,000 shops will close in 2011, as retailers shrink the size of their portfolios.
In contrast to the main trend, however, major food retailers are set to expand “amid one of the biggest store-opening sprees in their history”, despite the economic gloom and poor official sales volume data. LDC points out that these large supermarkets have the resources to invest across the whole economic cycle, “rather than change direction as a result of short-term forces”. Smaller retailers may not be so resilient.
