Shop rents have been cut across the UK by close to a third over the past year as landlords concerned about emptying centres have slashed terms to attract retailers.
Rising vacancies in shopping centres and high street shops have caused a slump in rents, with as much as 28m sq ft of retail space put into insolvency over the past 18 months, according to DTZ, the property consultant.
This includes about 5,550 stores on the high street and in shopping centres – as a result of the collapse of retailers such as Woolworths – although many of these have been re-let or are still paying rent while in administration. There are also more empty stores on retail parks, where vacancy rates have almost doubled from 8.3% in 2007 to more than 15% this year following the demise of retailers such as MFI and Land of Leather. The slump has been exacerbated by “pre-pack” administrations and debt restructuring deals such as that agreed by JJB last week.
Those retailers still trading well in spite of the economic downturn have become more picky about where they open stores and demand hefty discounts and generous lease terms from landlords keen to maintain cash flow.