Vacant shops In Yorkshire fall as development shortage bites
28 Feb 2010 - King Sturge are predicting that the number of vacant retail units across Yorkshire is set to fall this year because of a shortage of new space.
King Sturge is one of the largest international property consultancies in Europe (51 offices in 15 countries), with a comprehensive network of over 165 wholly-owned and associated offices worldwide. Mopre than 4,000 staff throughout these offices cover all property sectors and specialisms, including plant and machinery. In Europe, King Sturge operates in principal mainland European cities.
Retail vacancy rates are set to fall from a 20 per cent high in prime shopping centres such as Leeds, Sheffield and York and could be as low as ten or 12 per cent by the end of this year (2010) says the King Sturge Leeds-based In-Town Retail Team.
However, the research warns that vacancy rates will remain higher in some centres such as Barnsley and Wakefield as the recession continues to expose towns that are failing to implement effective regeneration policies.
Head of King Sturge's In-Town retail team, Jonathan Newns, a partner, says: "The key shake-out among retailers happened a year ago as the start of the recession weeded out weaker players and those exposed to onerous finance structures. As a result we will see retail vacancy rates fall as retailers take advantage of flexible and incentivised leases where they remain available.
"Even so the tough times are far from over. A number of players remain vulnerable and further casualties are expected in the fashion and furniture sectors."
Retail property values are also expected to start to recover by the end of the year. Newns adds: "2010 will still be a tenants' market. Underlying rents are forecast to decline by 3.1 per cent this year and 1.3 per cent in 2011. While headline rents in Yorkshire and Humber have generally fallen by 20 per cent in prime areas, some the more secondary locations have seen as much as 50 per cent reductions.
"We predict that this decline will slow dramatically in 2010, rental values will bottom out and probably improve slightly towards the end of the year as landlords refuse to increase incentives to occupiers as the economy improves."
The King Sturge research says that, in spite of the recession, around three million sq ft of new shopping centre space opened in Yorkshire last year (2009). Although a significant proportion was let, it was on very favourable terms for retailers.
Newns adds: "The pipeline will slow to a trickle during the next two years in the wake of financing issues and perceived occupier weakness. However, the next wave of development is already being lined up for 2012/2013, when market conditions will have improved. Examples in this region are Trinity Way, Wakefield, being developed by a private consortium headed up by Shepherds and Land Securities new 1million square feet Trinity Quarter in Leeds.
"Meanwhile, supermarkets will continue to provide some salvation for the retail sector. In spite of lower price inflation, they remain highly expansive, and will continue to absorb some of the over-supply in bulky goods retail warehousing and fall-out from the high street, as well as increasingly offering ‘anchor' options for new developments. "
