British Retail Consortium report finds retailers are cautious about investing in new stores
A report by the British Retail Consortium (BRC) has revealed that the vacancy rate of retail units in the first quarter of 2023 saw no improvement as cost pressures made many retailers think twice about investing in new stores.
In the first quarter of 2023, the overall vacancy rate remained at 13.8 per cent, the same level as the fourth quarter of 2022. It was 0.3 percentage points better than the same period last year.
Geographically, Greater London, Southeast and East of England were found to have the lowest vacancy rates. The highest rates were in the Northeast, followed by Wales and the West Midlands.
While High Street vacancies remained at 13.8 per cent in the first quarter, the same level as the fourth quarter of 2022, both shopping centre vacancies and retail park vacancies improved.
The BRC report found that shopping centre vacancies improved to 17.8 per cent, down from 18.2 per cent in the fourth quarter of 2022.
Retail park vacancies also improved to 8.7 per cent in the first quarter of 2023, a 0.3 percentage point reduction from the fourth quarter of 2022. It continues to remain the retail location with by far the lowest vacancy rate.
Helen Dickinson OBE, Chief Executive of the British Retail Consortium, said: “Despite shopping centres holding the highest proportion of empty units compared to other locations, it saw the largest quarterly occupancy increase thanks to the success of outlets as well as recent efforts to repurpose empty units, especially in the Northeast.
“While Northern regions saw the biggest uptick in net openings, they continued to lag behind the rest of the UK with the highest vacancy rates in the country, laying bare the North-South divide.
“With stubbornly high inflation and huge cost pressures facing business, retailers will continue to be cautious about future investments.”
Lucy Stainton, Commercial Director at the Local Data Company, commented that the stabilisation of vacancy rates is partially indicative of operators, in the main, having a better than expected Christmas but coming into the first quarter still cautious and biding their time to see how various macro-economic factors play out into 2023.
She added: “That being said, whilst there has been a slowdown in the growth of independent businesses, we are seeing a number of chains return to focus on acquisitions and we predict that activity levels should ramp up between now and the end of the year, as the challenges operators face begin to ease up, with operators adapting their portfolios to meet current consumer demands, within this economic climate.”
Stainton stated that it was “encouraging” to see vacancies coming down across shopping centres, which were badly challenged during the Covid pandemic, more so than any other location type. She continued: “Again this speaks to a cautious return to growth for many chains, as well as more diversity within these schemes, as businesses who have traditionally been more high street focussed such as independents, turn their attention to shopping centre assets.”
Southeast-based retailer Lifestyle & Mobility recently opened its flagshop store in a shopping centre location in Basildon, Essex. Going by the name ‘Lifestyle’, the name of the new state-of-the-art store reflects its role as selling a wider range of products besides mobility equipment.
