According to figures collected by the Local Data Company (LDC), the number of commercial property shops lying empty in Britain has hit an all-time high of 14.6 per cent.
Town centre commercial property vacancy rates had begun to stabilise at the end of 2011, however they have increased from 14.5 per cent in January to 14.6 per cent in February, the LDC said. This is due to a surge of large commercial property retailers going into administration following a bad Christmas.
It is the highest statistics since the index started four years ago and equates to one in nearly seven commercial property shops being shut in the UK. It is further indication of a challenging start to the year for commercial property retailers.
The latest survey from mortgage provider Nationwide said its consumer confidence index dropped by three points to 44 in February, well below its average, mainly due to concerns about employment prospects. There was a rise in the number of respondents describing their financial situation as bad.
The fall came even with easing inflation and improved industry surveys for the service and manufacturing sectors at the start of the year.
Nationwide’s Chief Economist Robert Gardner, said: “Even though interest rates remain at historic lows and the Bank of England opted to inject another £50bn into the financial system in early February, weak labour market conditions combined with weaker-than-expected economic growth are continuing to weigh on confidence.”
New data from the Bank of England, also released last Friday, back this up. The data indicates cautious consumers are electing to pay off credit cards and loans, rather than take on new borrowing.
One of the UK’s biggest commercial property bike retailers, Evans Cycles told the BBC’s Today Programme that it was having to be very sensible about its prices.
Chief Executive Nick Wilkinson said: “We are peddling into a headwind in terms of the consumer economy. Confidence remains low; getting people to spend money on a bike is about persuading them that it is value for money.”
Nevertheless, Nationwide added that the number of customers planning to buy household goods-an indicator of confidence-was greater in February than a year previous. Mr Gardner further added: “Given the uncertain economic outlook, it is no surprise that consumers remain cautious about making larger purchases, with nearly half of all respondents thinking it is a bad time to make a major purchase.”
This mirrors official retail sales data for the month, published by the Office for National Statistics (ONS) last Thursday. The ONS said sales volumes dropped by a larger-than-expected 0.8 per cent in February. However they were still 1 per cent higher than a year earlier.
The Local Data Company said the increase in empty commercial property premises was “not unexpected” as commercial property retailers continue to cut back and even go bust.
LDC Director Matthew Hopkinson said: “It is a timely reminder to the government, who are due to respond to the Portas Review this month, of the significant challenges facing town and city centres up and down the country.”
Retail expert and TV presenter Mary Portas was asked by the Government to look at techniques to give a new lease of life to struggling town centres. Her report, published in December 2011, recommended cutting guidelines and proposed a greater role for street markets in town centres.
Director of policy at the British Property Federation, Ian Fletcher said: “It’s crucial that the government responds to Mary’s review with a menu of recommendations next week that local people, councils and businesses can ‘pick and mix’ to help start to reverse the damage that many of our high streets have suffered.” 
He further added: “Our high streets need vision, trade and investment, and landlords therefore welcome a key recommendation from the Portas report in December that allows property owners to match the funding that retailers put in to Business Improvement Districts-successful vehicles that allow traders to come together to plan and fund improvements in their areas.”
At present, only commercial property retailers can contribute to Business Improvement Districts. It will call for a change in the law to allow commercial property landlords to take part on these initiatives, which are at present funded by increases in business rates.
The Government said it would issue a full response shortly and pointed to the competition it had in full swing to give 12 town centres the chance to be given help and funding as “Portas Pilots”.
Local Government Minister Grant Shapps, said: “We have also scrapped Whitehall rules that instructed councils to hike parking charges, given councils new powers to cut business rates for local firms, and doubled small business rate relief, which will help half a million small firms for the next two and a half years.”
A risk list has been issued of the best and worst towns and cities in the UK for commercial property retailer investment.
The study by BNP Paribas Real Estate found that Derby, Bradford and Wolverhampton were among the most uncertain places to set up a commercial business while the London suburbs of Wood Green, Lewisham and Uxbridge were among the least risky.
The Retail Risk index ranks commercial property retailer financial health across 100 locations in the UK.
Head of retail at BNP Paribas Real Estate, Ian Parish, said some of the results were unexpected. He said: “Other than an obvious north-south divide in line with affluence, the actual towns themselves are not necessarily the ones we thought we’d be identifying at the beginning of the process and the report goes to show that even the most dominant towns and cities are not immune to risk.”
The national picture revealed that overall, 10 per cent of commercial property units were at great risk of collapse or closure, while 20 per cent of units are either charity shops or vacant. A further 17 per cent of occupied commercial properties by retailers pose a ‘high’ risk. Only just over half of the units examined are occupied by retailers considered ‘secure’.
Furthermore, retail sales figures presenting a sharp decline in February and lower-than-estimated growth in January have darkened the outlook.
Nevertheless, Britain’s largest commercial property department store chain, John Lewis has bucked the trend. It recorded record trade volume in March as the launch of the new iPad, sunny weather and an early Mother’s Day encouraged customers to part with their cash.
Sales soared 20.9 per cent year-on-year to £63.1m in the week to March 17.
