Occupancy rates continue to rise
Published: 29 July, 2016
Vacancy rates fall for the fifth consecutive quarter
For the fifth quarter in a row, vacancy rates across UK shopping centres, retail parks and town centres have continued to fall, according to the latest BCSC / LDC data.
Vacancy at UK shopping centres fell by 1.6 per cent in Q2 2016, compared with the previous quarter, indicating sector resilience.
According to the latest data, larger shopping centres performed better than the overall average, with the top 50 and 100 UK shopping centres recording a 2.3 and 2.2 per cent decline, respectively. Vacancy also fell by 2 per cent at the top 30 largest centres.
Declining vacancy was also recorded at UK retail parks and town centres, where vacancy fell by 0.9 and 0.5 per cent, respectively.
The BCSC / LDC vacancy index also reports:
• Declining vacancy was recorded across all regions with centres in the East of England and North East seeing the largest drops, both recording a 2.1 per cent decrease
• England and Scotland were the best performing nations with a 1.7 and 2.1 per cent drop while there was a slight increase in vacancy of 0.3 per cent recorded for Welsh shopping centres
• There was a slight increase in leisure provision at the top 100 and top 50 centres, increasing by 0.7 and 1.0 per cent, respectively
• The proportion of multiple retailers increased slightly by 0.9 per cent, correspondingly, there was a 0.9 per cent drop in independents
Edward Cooke, acting chief executive at British Council of Shopping Centres (BCSC), commented: “LDC’s latest research shows vacancy rates declining for the fifth consecutive quarter, reaffirming the stable trend of declining vacancy at UK shopping centres driven by a strengthening occupier market and active asset management.
“In light of the high profile closures of BHS, Austin Reed and Store Twenty One and the recent Brexit vote, we expect the industry will be watching closely to see whether we have reached the top of the curve in terms of the long term trend of steadily falling vacancy rates or whether the trend continues into the second half of the year.
“However, as the research to date shows, the industry remained resilient in the run up to the referendum and many of the fundamentals that drive retail performance - high employment, real wage growth and economic growth continue to be relatively strong and will help maintain confidence in the sector.”
Matthew Hopkinson, director at LDC, commented: “Shopping centre occupancy rates have continued to improve for a prolonged period which is good news for the sector.
The improvements are being led by the rise in food and beverage outlets, which are now a core component for a shopping centre to be successful in terms of footfall and longer trading hours.
"There is, however, considerable uncertainty post the BREXIT vote for all key stakeholders - landlords, investors, occupiers and consumers. The continued investment and improvement in shopping centres might therefore stall for the remainder of 2016 until the wider impact and opportunities become clear.
"In addition, occupiers are facing increasing costs which is impacting profitability and thus the affordability of rents which could lead to subdued rental growth for landlords or indeed continued rebasing or rents in more challenged locations.”