Rents across the UK’s high streets and shopping centres are set to drop by almost a fifth between now and the end of next year, quashing hopes of a revival of the troubled retail property sector, an influential property report has forecast.

As struggling retailers demand cheaper deals from landlords desperate to keep properties occupied during the recession, rents are forecast to have dropped by about 11 per cent by the end of the year, according to the annual midsummer report on retail property from property consultancy Colliers CRE.

Some landlords are resorting to offering rent-free occupation for up to six years in a bid to attract tenants.

Colliers said overall average rental values are expected to fall by 9% in 2010 and 1.3% in 2011, only returning to growth in 2012. That will put extra pressure on retail property owners already struggling with a slump that has wiped out almost half the value of their assets.

Financial Times