If the story of David and Goliath was to be set in a commercial property context, the battlefield that they met on could well be the UK high street.
Goliath would be the large retail operations, occupying many of the prime locations, probably in the south of the England. David would be the smaller, independent shops, commonly found in secondary locations.
How would a commercial property David adapt in such an environment? The differences between the two are examined by commercial property experts Jones Lang LaSalle, using information gained from the Local Data Company (LDC), which analyses location data and offers insights into retail trends.
The LDC report shows high street shop vacancies were at 14.5% by the end of 2010, a 2.5% rise on the end-of-year number for 2009. An article in the Guardian is headlined ‘Empty shops are killing UK’s high streets’. It points to a 16.5% commercial property vacancy rate in the Midlands and northern areas of England. This is compared to 12.3% in the south, underlining the ever-apparent north–south divide.
This data is seen as ‘concerning’ by Jones Lang LaSalle, although further foraging into the figures is then made by one of its analysts. The nature of available commercial property in each area ‘screams of an oversupply of small shops’, says Stephen Daniels. Almost 22% of vacant UK retail units are found to be sized at 2,000 sq ft or less. This is compared to 4.5% of the units over 10,000 sq ft. Consequently, ‘further flexibility and lease restructuring on the part of landlords’ to attract new tenants is a recommended strategy. Another is addressing ‘the demand for short term returns’, which is argued to be ‘restricting initiative’.
A final suggestion catapulted out is for commercial property landlords to become ‘proactive’ by installing temporary lets and ‘making the space special’.
In this scenario David-sized commercial property may not only be bringing down the Goliaths, but could affect the market as a whole, so something needs to be done to prevent this spiralling out of control.
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