06/05/2009 - Empty spaces drive down shop rents
Rents for retail space have dropped by nearly a third over the past year as landlords slash rates to fill up the growing number of empty stores.
Shop rents have fallen by an average of 30% on new leases driven by an increase in incentives offered to retailers such as discounts and rent-free periods, according to property consultant DTZ.
It said vacancy rates have risen to 15% this year from 8.3% in 2007 as big chains such as Woolworths, Adams and Zavvi collapsed and others like MFI and Land of Leather closed stores.
In the past 18 months, a total of 28 million square feet of retail space has been put into insolvency, with 5,550 outlets in shopping centres, retail parks and on the high street.
Mark Williams, head of retail investments in Europe, said the empty stores, poor sales and lack of available capital were all driving the rents down.
He said: "In any market we have a balance between demand and supply and now the balance has swung in the favour of the renters rather than the landlords.
"The worst thing a landlord can do is to let at the prices they were two years ago - they have got to adapt."
Copyright © Press Association 2009
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