Central London retail pulls ahead – Colliers International

The proportion of vacant retail units in Colliers International’s sample of 10 Central London retail streets has continued to decline over the past six months, down from 4.4% in July 2010 to 3.5% in January 2011. The firm says the proportion of vacant floorspace also fell during the same period, from 2.4% to 2.0%. This compares with a UK average figure of 10.0%.

The gap between Central London retail property and that in the rest of the UK remains wide, and shows no real sign of diminishing, the firm says. “In fact, given the historical trend, the latest fall in the national vacancy rate could well turn out to
be a ‘blip’ in the data series, rather than a significant turning point, meaning the difference between the Central London and UK vacancy levels could begin to grow once more over the coming months,” it adds.

The firm’s research, which uses fieldwork carried out in January, does suggest that shops becoming vacant are finding it difficult to attract new tenants, particularly if they are small or poorly located. The proportion of vacant units in its survey that had been unoccupied for six months or more rose to 61.0% in January, from 46.2% in July 2010. Among the 10 key streets surveyed, Cheapside still has the highest vacancy rate, even though the opening of One New Change in October 2010 has cut the proportion of vacant units on the street from 16.7% in July 2010 to 8.6% in January 2011. The other key streets are Bond Street, Kensington High Street, Kings Road, Long Acre, Brompton Road, Regent Street, Oxford Street East, Victoria Street and Oxford Street West.

Colliers International advises landlords that it is in their interests to avoid vacancies by becoming more flexible about rentals and leases, in order to minimise liabilities with regard to empty property tax. From 1 April 2011 owners of empty properties with a rateable value between £2,600 and £18,000 will no longer receive a reduction in their rates bill if the property is
empty for longer than six months – the rates will go up to 100%, it notes.

The firm expects the royal wedding in April to boost retail sales in the capital, especially in the West End, and expects this to translate into a further fall in vacancy rates in Central London when it carries out its next survey in July.