According to the Local Data Company (LDC) the number of empty commercial property shops on UK high streets is set to rise in 2012.
Commercial property shop vacancy rates stabilised in 2011 at 14.3 per cent, however the future looks bleak as it is estimated that a staggering 48,000 commercial retail sites lie vacant across the country due to rising unemployment, weak consumer spending and the growth in commercial property supermarkets, online shopping and out of town commercial property malls.
The highest vacancy rate of large commercial property centres was counted in Stockport, where more than 30 per cent are now empty. The worst hit areas are the Midlands and the North. According to the study of 700 British town centres, Grimsby, Nottingham, Blackburn and Wolverhampton saw vacancy rates increase with at least one in four commercial property stores closed.
Matthew Hopkinson, Director at LDC said: “The stable top line rate hides the significant breadth of town centre vacancy rates up and down the country. The odds are stacked against a positive take-up of shops and as such the new reality of 48,000 empty shops is here to stay unless an alternative use or purpose can be found.”
The report showed that the best performing commercial property centres are mainly in the South and West, with Taunton, St Albans and Salisbury enjoying a vacancy rate of less than 9 per cent. Yorkshire and the Humber saw average vacancy rates of 18 per cent, better than the West Midlands, North West and North East.
Chief Executive of the British Property Federation, Liz Peace, said: “The figures show that while some high streets are thriving, others remain locked in a spiral of decline.”
The national vacancy rate edged down a little from 14.5 per cent recorded in the first six months of 2011 to 14.3 per cent in the second half. When broken down the headline figure is worse for Wales and Scotland, at 17.3 per cent and 15.4 per cent respectively, than England, where it is at 14.2 per cent.
The report listed some of the high street commercial property stores that went into administration in 2011 including Best Buy, Focus DIY, Barratts, Lombox and Habitat.
The British Retail Consortium (BRC) defined vacancy rates as “worryingly high” in many parts of the country and called on the Government to reduce business rates, which are set to rise by 5.6 per cent in April.
Stephen Robertson, BRC’s Director General said: “The scale of retail failures since Christmas and number of shops standing empty show the effects of high costs and weak demand on retail businesses and the people and places that rely on them.”
Official data shows that the proportion of retail spending taken by the high street had fallen from nearly 50 per cent in 2000 to 42.5 per cent and is expected to drop below 40 per cent by 2014.
The report also said that although the share of shopping taken by out-of-town commercial property shopping centres had risen to 31.5 per cent in 2011 from 28.1 per cent in 2000, the main cause for the decline of high street commercial property shops was online shopping. Online sales have doubled over the last decade to make up 10 per cent of retail sales, according to retail consultancy Verdict.
Mr Hopkinson said: “Technology is driving consumer behaviour to a world of engagement, entertainment and the ability to shop where, how and when we like.”
He further added: “Town centres need to adapt to this changing environment if they are to survive and thrive.”
Landlord Mark Smith says he has done just that. He bought ten empty commercial property shops in Leigh Park, in Havant, Hampshire, one of the worst-performing high streets in the LDC list.
Six months on, seven of the commercial property shops are let and he has found tenants for the remaining three, thanks to a sharp drop in rents. One of them had remained empty for 23 years.
He told BBC news: “I have purchased them at reasonable prices and am able to offer realistic rents, about half the price that existing landlords are offering them at. Traders have come in and are trading successfully.”
However some senior industry figures believe the Government is wasting its times trying to revive high streets and should consider drastic alternatives such as redeveloping commercial property stores as houses. Phil Wrigley, a veteran retailer who has held directorships at Debenhams, New Look, and BHS, said many commercial shopping streets were “in a death spiral” and “irrelevant to the needs of shopping today”, and compared their fate to the shipbuilding industry.
Meanwhile, the speed of high street closures is expected to accelerate as it is estimated that about 50 per cent of the country’s commercial property shop leases expire over the next seven years, giving struggling commercial property chains the opportunity to retrench from the weakest trading locations.
The British Council of Shopping Centres estimates that a fifth of UK commercial property shopping malls are in financial difficulties, with around 20 per cent secondary commercial property shopping centres now on the market.
