Over the last five years, 6,000 retail outlets have closed in Britain thanks to a combination of the crippling business rates regime and Covid, according to the latest data from the British Retail Consortium (BRC) and Local Data Company (LDC).
In the second quarter of this year, the overall vacancy rate rose to 13.9% – a 0.1 percentage point drop on Q1, but 0.1 points up on the same period last year. Vacancies on high streets increased 0.1% in Q2, but shopping centre vacancies remained unchanged from the first quarter.
The highest vacancy rates were in the North East and the Midlands, followed by Wales and Scotland, with the lowest rates in Greater London, the South East and the East of England.
Lucy Stainton, director at LDC, said: “The headline findings from Q2 are unlikely to have come as a surprise to anyone, with economic pressure from rising interest rates and inflation already mounting as the year began. Current challenges to businesses have been compounded by tightening discretionary spend and a dip in confidence among consumers. The economic headwinds that have made the headlines have filtered into the data, reflected in a slight rise in the overall vacancy rate.
“The high street has seen some of the most notable impacts, with rising rents and increased competition putting pressure on small and independent businesses, who may struggle to meet high operating costs. Across all location types, vacancy has reached critical levels, highlighting an ever-increasing need to redevelop units to breathe life back into retail destinations.
“Retail is a diverse industry; each retail and leisure subsector faces its own unique challenges, but also, importantly, has its own unique strengths. As the only location type to see a decrease in long-term vacancy (more than three years) this quarter, retail parks continue to prove resilient, bolstered by their strong occupancy fundamentals and relatively small lot sizes.
“Retail parks have shown us excellent examples of agile strategy in action, splitting larger units into smaller ones or converting space for alternative uses to successfully revitalise vacant stock. The current climate is undeniably difficult, but it should not be overlooked that today’s retailers are more innovative and future-thinking than ever.
“With the continuing trend in mind, we do not foresee any improvements to vacancy rate in future. However, given that the latest rises in vacancy have not been particularly significant, we anticipate that any increases in the near future will be gradual.”
Helen Dickinson OBE, chief executive of the BRC, added: “To inject more vibrancy into high streets and town centres, and prevent further store closures, government should review the broken business rates system. Currently, there’s an additional £400m going on retailers’ bills next April, which will put a brake on the vital investment that our towns and cities so desperately need.
“The government announcement earlier in the week about making changes of use to vacant units easier is welcome but it’s important local councils have a cohesive plan, and don’t leave gap-toothed high streets that are no longer a customer destination and risk becoming inviable. Government should go one step further and freeze rates bills next year.”
