Retail Availability Falls For Second Consecutive Quarter

29 Nov, 2010, London

Research carried out by Cushman & Wakefield shows that the average availability rate of retail units across Great Britain’s top streets has fallen to 8.8% as at 1 November 2010, down from 9.8% in August. This figure is the lowest level of retail availability recorded in the last 18 months.

Stronger operators which have managed both their cash flows and stock levels appropriately, continue to take market share at the expense of weaker retailers. The number of retailers going into administration has fallen sharply and is therefore having a lesser impact on the availability of retail units.

Overall availability has fallen by 1.0% over the last three months from August 2010. The number of units available within the key retail areas as a consequence of administration has remained stable at 1.4%. Compared with a year ago (Chart 1), the overall level of availability within the main areas has fallen 1.5%, down from 10.3%.

The number of units available within the key retail areas as a consequence of administration has fallen very marginally by 0.08%. Over the year this figure has dropped 0.4% from 1.8% in November 2009. This is supported by data released by Deloittes, with 3^rd quarter retail sector administrations down 13% on the previous quarter and 50% on the same nine month period in 2009.

The prime areas of a selection of key towns across all regions of Great Britain have been examined in detail to gain a clearer picture of the level of retail availability (Chart 2). The lowest levels of availability (including those units in administration) as at 1 November 2010 are currently in Central London (4.9%) and the North (7%). Outer London has the highest level of availability (16.2%), followed by Scotland (12.7%) and the Midlands (9%).

Overall there has been a 1% decrease in the number of units available in the three months since the 1st August 2010. The Midlands has seen the greatest change, with 3.1% fewer units available in November than August, followed by East England with a fall of 2.4%. The only region seeing an overall increase in availability is Scotland where there has been a 1.6% increase. All other regions show a reduction in availability; South West & Wales (-1.8%), Outer London (-1.1%), South East (-1.1%), the North (-0.7%) and Central London (-0.2%).

While there are concerns that the economic recovery may be slowing, the preliminary figure for Q3 GDP growth again surprised on the upside at 0.8% - following a solid performance in Q1 and very strong growth in Q2 - and the economy appears to have remained more resilient than many expected. The talk of public sector wages freezes, job cuts and fiscal tightening has resulted in some slightly negative retail sales headlines. However, consumers have shown remarkable resilience throughout the downturn and this may well continue. Indeed, retail sales growth remains positive and the ONS September figures (volumes) show a marginal 0.5% year-on-year increase.

Recent growth rates have been eroded by a fall in food sales but there has been cause for optimism, with non-food sales up 3.8%, although sales of household goods continue to struggle. Stronger retailers will continue to expand albeit with a very careful and considered location strategy, and where the market does shift retailers may consider their store format and offer. With this in mind, retail availability in the best locations should continue to edge downwards in the coming months.

Justin Taylor, Head of UK Retail at Cushman & Wakefield said: “Whilst concerns remain about the consumer outlook for 2011, the availability of prime retail space has continued to edge down over recent months across most parts of the UK. Encouragingly, one of the regions with the highest rates of availability - the Midlands - has seen a significant fall to under 10%. However, the sharp contrast in fortunes between Central London and the rest of the country is still very much in evidence, with availability in the centre of the capital now standing below 5%, on the back of a weaker pound, buoyant tourist numbers and strong retail sales."

"For prime locations, we are cautiously optimistic that we will see a further gradual decline in availability rates in the coming months. However, as always, the Christmas trading period will be critical for retailers and it remains to be seen how consumers will react to the VAT increase, the forthcoming spending cuts and wage freezes for many public sector employees."

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