The number of empty shops in UK high streets and shopping centres has fallen for the third quarter in a row, new figures suggest. This, says the BRC and Local Data Company, points to a post-Covid recovery. Retail parks continue to have the lowest vacancy rates, followed by high streets and then shopping centres.
However, says the LDC’s Lucy Stainton, retailers may slow the rate of store acquisitions as they are faced with the effects of inflation stemming from the supply chain on the cost of living.
The overall store vacancy rate in Great Britain fell to 14% in the second quarter of 2022 – the three months to June 30, according to the BRC-LED Vacancy Monitor, Q2 2022. That’s a 0.1 percentage point improvement since the first quarter of the year and 0.5 percentage points higher than the same period last year. This is also the third consecutive quarter of falling vacancy rates.
Empty shop rates fell across all locations, including shopping centres (18.9%, from 19% in Q1), high streets (14% from 14.1%), and retail parks (10.2% from 10.6%). Retail parks continue to be the location with the lowest by far.
Helen Dickinson, chief executive of the British Retail Consortium (BRC), says: “Vacancy rates continued to travel in the right direction, with the third consecutive quarter of improvement, though rates remain almost two percentage points above pre-pandemic levels.”
She adds: “Shopping centres continue to lag behind high streets and retail parks; a situation exacerbated by the bigger challenges associated with redeveloping shopping centre units. This has led to a rise to over nine percent in empty shopping centre units which have been closed for two or more years.”
The figures show a strong north-south divide, with more empty shops in northern England, Scotland and Wales, although the gap is narrowing, led by northern England.
Challenges ahead
Lucy Stainton, commercial director at the Local Data Company, says: “Vacancy rates have continued to decrease for the third quarter in a row, pointing to a more sustained recovery post Covid which is certainly encouraging. Operators, both chains and independents, have been acquiring space especially on high streets and in shopping centres which again is encouraging given these location types were particularly impacted by the pandemic.
“That being said, there are a number of economic headwinds facing retailers and consumers alike, including the cost of living increases as well as issues across supply chains. This may mean we see a slow down in new store acquisitions as operators consider what this might mean for their investment strategy. In parallel to this however, we will continue to see increased redevelopment activity across the market, with redundant retail space being reviewed for other uses. The net impact of both of these phenomenons will be the deciding factor in terms of what happens to vacancy rates across GB moving forwards.”
The longer-term trend suggests that the UK vacancy rate peaked at 14.5% in 2021 in the top 650 towns and cities in the UK, and has since improved over three quarters to reach 14%. Over the course of pre-pandemic 2019 it grew from 11.6% to to 12.1%.
The BRC’s Dickinson adds: “Vacancy rates tend to lag behind other metrics in responding to economic changes, meaning that the vacancy rate is likely to improve further – slowly returning towards pre-pandemic levels. However, Government policy also has a big impact on the viability of shops.
“A 2021 BRC survey showed that unless the burden of business rates is brought down, more than 80% of retailers said they were ‘likely’ or ‘certain’ to have to close shops. The recent consultation on the design of the Transitional Relief scheme – a flawed system within business rates that could cost retailers over £1bn in three years – is an opportunity for the next Prime Minister to make meaningful change for retail locations and the local communities they support.”
