As the economic recovery continues to gather pace, regional areas are beginning to feel the benefits that were for some time limited only to London and the South East. Although wide variations remain, the regional commercial property markets have been showing signs of improvement since the start of 2014. New evidence of this comes in a recent report from Colliers International showing strong improvements in retail rents in both the North West of the country and in Birmingham.
According to the Midsummer Retail Report, the rental decline slowed to only 1 per cent on average nationwide last year. This was bolstered by a 1.8 per cent rise in prime retail rents, which marks the first increase of this magnitude since the recession and indicates the first climb towards the 2008 peak, which was 29 per cent higher than the present rate.
Although the North West saw retail rents down for the fourth year in a row, the region performed the most strongly in the UK for the first time since 2011 – excluding London, of course. This means that, although retail rents are still 19 per cent below pre-2008 levels, stability has increased massively with only 18 per cent of centres reporting a decrease in retail rents, compared to the 64 per cent recorded in 2013’s study.
Head of retail agency at Colliers International, David Fox, says; “The more optimistic outlook for the North West is borne out by our own market activity on behalf of retailer and landlord clients.
“Whilst there are still towns and secondary streets in bigger urban areas that have an uncertain future, new entrants into the North West retailing landscape and a proactive approach from landlords are enhancing the appeal of the region’s shopping destinations.”
Yet it is not only the North West that is showing great promise in retail rents stability, as Birmingham was shown to have risen by 4 per cent– more than double the UK average and securing its title as the best performing retail centre in the West Midlands. This result helped the region to secure its most positive report since before the recession struck, as although it remains the third worst performing region in the UK, the year on year decrease in centre retail rents fell from 55 per cent in 2013 to 39 per cent, and 6 per cent actually experienced growth where there was none in 2013.
Mr Fox continues; “Despite the West Midlands ranking as the third worst performing region in the UK, this year marks the first signs of recovery, a trend that is being mirrored across the country.
“Despite this, Birmingham’s retail centre rental growth is double the national average at 4 per cent, making it the best performing area in the region and in the top 10 per cent nationwide.”
Why do you think the West Midlands is performing so poorly as a whole when compared to the neighbouring North West region?
