Retail vacancy rates improve, but still below pre-Covid levels

Vacancy rates for retail spaces in Britain improved further in the third quarter, according to fresh industry data on Friday, although they still remained above pre-pandemic levels.

The BRC-LDC vacancy monitor showed the overall vacancy rate decreased to 13.9%, which was 0.1 percentage points better than the second quarter, and 0.6 points better than the same period last year.

It was also the fourth consecutive quarter of falling vacancy rates.

The data showed all locations seeing improvements in vacancy rates in the third quarter, with shopping centre vacancies falling to 18.8% from 18.9% in the second quarter.

High street vacancies decreased to 13.9% from 14%, and retail park vacancies decreased to 9.7%, which was a 0.5 percentage point improvement from the prior three months.

Additionally, it remained the retail location type with “by far” the lowest vacancy rate.

Geographically, London, the South East and the East of England had the lowest vacancy rates, while the highest rates were in the North East, followed by Wales and the West Midlands.

“The overall shop vacancy rate improved for the fourth consecutive quarter; however, vacancies remain higher than pre-pandemic levels,” said Helen Dickinson, chief executive officer of the British Retail Consortium.

“Some locations are benefitting from a pickup in tourism and a gradual return to offices, but levels of footfall are still below those of 2019.

“This gave some businesses the confidence to start investing, opening new stores around the country, especially in retail parks.”

But Dickinson said the north-south divide was again laid bare in the figures.

“While the north has seen some of the biggest improvements in openings over the last year, they still have some of the highest vacancy rates in the country, with one in five shops closed in the North East.

“The costs of operating in many towns and cities remains high and demand will be tested by the fragile economy and falling consumer confidence in the lead up to Christmas.

“Higher costs are already pushing up prices and the industry faces a government imposed extra £800m business rates bill from April 2023.”

That, Helen Dickinson said, would force many retailers to make tough decisions about whether to invest in new stores or close existing ones.

“Government should freeze business rates and reform the broken transitional relief system.

“This will support investment in communities across the country and help keep prices low for consumers.”

Reporting by Josh White for Sharecast.com.