Retail vacancy rates hit 14%

Shop vacancy rates have stabilised at 14% in the first half of 2011 according to the latest data from the Local Data Company (LDC). But the gap between the worst and the best performing locations has widened with some locations, such as Margate, recording vacancy rates of 36%.

While it is good news that the pace of shop vacancies is slowing down, there does appear to be a North/South divide growing. London and the South East continue to perform better than town centres in the North of England. All the southern regions see an average vacancy at or below 11% while the Midlands and North range from just under 13% in the East Midlands to 16% in the North West.

These figures also confirm data released in the BRC’s Footfall and Vacancies Monitor which painted a similar picture for vacancy rates of 11.2% of the UK overall. The BRC figures showed that Northern Ireland had the highest vacancy rates in the UK at 17.1% followed by Wales with a vacancy rate of 13.4%.

In the medium to long term Retail Economics does not see a significant improvement in vacancy rates in the UK. Pressure is mounting on the retail sector with the latest data indicating that consumer spending has entered a technical recession. High unemployment, low wage growth and persistently high inflation are all bearing down on real disposable income. Pressure on the sector is set to intensify as austerity measures begin to bite and benefit cuts are implemented. Consumer confidence remains fragile and with footfall down, vacancy rates are unlikely to improve in the near future.

Perhaps more worrying is the underlying structural change that has evolved in the retail sector over the last 10 years. Advances in technology have accelerated a change in shopping habits. The growing influence of the internet means that fewer people need to enter town centres, particularly in secondary and tertiary locations. The reality is that retailers are rationalising their store portfolios, focussing on the most profitable outlets in locations with the highest footfall and largest growth potential. With the cost of property, labour and the costs of goods rising, many retailers will be forced to close less profitable stores and let leases expire in many town centres units.

Location Footfall
May – July

2011 v. 2010

Vacancy Rates
May 2011

Greater London 1.6% 6.5%
South West 0.4% 7.9%
Scotland 0.2% 11.1%
South East -0.5% 11.3%
East Midlands -3.2% 9.9%
North & Yorkshire -5.5% 13.1%
Northern Ireland -6.1% 17.1%
East -6.2% 8.7%
West Midlands -6.6% 10.5%
Wales -9.2% 13.4%
Weighted National Average -1.0% 11.2%