LDC: pre-Brexit uncertainty sees July drop in retail property activity

Britain’s shop vacancy rate marginally increased by 0.1% from 12.3% in June to 12.4% in July, according to new statistics from the Local Data Company (LDC).

This figure is down 0.6% from the same period last year. BDC said the change was driven by a 3.5% fall in the number of new units in July and a 44% drop in the number of vacant units getting new occupiers.

Overall activity levels were down 46% in July compared to 12 months ago. BDC said this is due to stakeholders in the property sector delaying major property decisions – such as new store openings, developments and conversions – in the lead-up to the EU referendum in June.

Analysis of vacancy rates by occupation type compared with the previous month shows that shop vacancy in July was 12.4% (+0.1% change), leisure vacancy was 8.1% (0.0% change), and the ‘all’ (retail & leisure) vacancy rate was 11.2% (+0.0% change).

The shopping centre vacancy rate dropped by 1.6% to 13.3% compared with the same period last year. Scotland (-2.6%) saw the biggest fall, while Wales was the only area to see a rise (+0.8%). This is a recurring theme, with Wales seeing a 12-month increase in vacancy in every month of 2016 so far.

Retail park vacancy rates dropped by 1%. The north-east saw the biggest improvement, with a 2.8% decrease in vacancy from July 2015 to July 2016 – significantly better than any other region. But the south-west was the only region to see an increase in its retail park vacancy rate, with a 0.2% rise in the last 12 months from 5.1% to 5.3%.

The town centre vacancy rate lifted by 0.1% in July compared with June, to 10.8%. But in the last 12 months the rate dropped by -0.5% from 11.3% in July 2015. Scotland was the only area to see an increase in its vacancy rate of 0.7% in the last 12 months while the south-west saw no change.

LDC director Matthew Hopkinson commented: “July’s numbers are significant when you look at the 12-month view and see what impact the political and consumer volatility has had over the last two months. The net result has been a freeze in normal activity levels, which is mirrored in many other areas of the economy.”

But, he stressed, “The marginal increase in the shop vacancy in July of 0.1% is NOT significant especially when one considers the all-time peak of 2012 being 14.6%. The UK ‘high street’ is evolving and does not require saving.

“What it desperately needs is to be understood and have clarity as to what is the most relevant purpose and role for the location, demographic and local economy it serves. Be it Blackburn, Burford or Banbury, they are all very different and at different stages in their evolution. The digital age has accelerated the changes and made the need to understand change at a local level more important than at any time in the history of our retail places.”

The Local Data Company visits over 2,700 towns and cities, retail parks and shopping centres. Each premise is visited and its occupancy status recorded as occupied, vacant or demolished. Vacant units are those units which did not possess a trading business at that location on the day visited. The shop vacancy index is based on the shop vacancy rates of the top 650 town centres (based on the CLG retail core).

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