Demand for retail and leisure property is expected to soar in selective locations as the economic recovery gathers pace over the next 12 months.
The forecast, from Jones Lang Lasalle (JSL), follows a year of more high profile high street casualties and reports of a disappointing festive trading period in many town centres.
Despite these continuing difficulties JSL reports that rental values in a third of the top 200 retail locations have risen to pre-recession levels. This upward trajectory is expected to continue throughout 2014 as demand for shops, restaurants and other high street properties increases.
JSL acknowledges that this trend is not likely to be replicated in the other two thirds of the country, and dubs these affluent exceptions ‘pockets of gold’. They include Oxford, Colchester, Brighton, Bath and Winchester. North of the border Edinburgh is singled out as another location where demand is set to rise.
Richard Brown, a director at JSL, explained that retailers will be assessing the size of their portfolios and that, while closures will continue in some areas, demand will rise in the markets they have identified. Consequently this year will accentuate the polarisation of the UK retail market.
“We believe the changing ranking of locations by range and spend will become even more evident in 2014 as lease events act as a trigger for change.
“While some retail areas will continue to slide against the backdrop of challenging market conditions and structural change – with rising vacancy rates – those with strong fundamentals and a broader appeal will continue to be attractive to consumers, retailers and investors and will rise accordingly,” he said.
Despite this optimism surrounding these prosperous locations, business rates continue to present an obstacle to growth and retailers were pleased to hear the chancellor address this issue recently.
In a speech last week, Mr Osborne said that he was aware that retailers needed help and that there were underlying problems that must be addressed when a discussion document on the reform of the system is published in the spring.
The British Retail Consortium (BRC), which has been pressing for a root and branch reform of the method used to calculate business rates, is looking forward to the debate.
“Now is the time to think boldly about reform that will support businesses that invest in the UK and employ millions of people,” said director-general Helen Dickinson.
