Report predicts 20% fall in high street rents over next three years

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by Lin Freestone

Property consultancy, Colliers CRE, has published its latest Midsummer Retail Report which indicates an uncertain outlook for the retail market, which will impact on the wider UK economy.

The report notes starkly that “this is the worst retail market we have seen since the early 1990s”.

Overall real-term rents have fallen by 3.1% in the year to May 2008. In real terms, shop rents are 12% lower than they were in 1989.

Over the next three years, Colliers predicts that rents in the high street will have fallen by a further 15% to 20%.

Due to a combination of increased availability and retailers experiencing tougher trading conditions, landlords are being pressured into offering more attractive incentive packages in order to persuade retailers to occupy empty units.

Run-down high streets and small shopping centres have experienced the sharpest falls in rents, together with those areas with a higher proportion of banks, offices and restaurants than shops.

Rent rises in Greater London and the South are almost at a standstill, and Wales and the West Midlands have seen the steepest rent falls.

However, some regions like the North West and Yorkshire, have seen rents increase during the year and have, so far, managed to hold up well.