Average prime retail rents across the West Midlands have taken a 4.4 per cent nose-dive in the last year, according to Colliers International’s annual Midsummer Retail Report.
Across the region, average rents are now £86.4 per sq ft, compared to £90.8 per sq ft 12 months ago. Out of all the British regions only the North West fared worse, with a 5.1 per cent drop since last year.
Not one of the region’s shopping towns posted an increase in rents over the last year. Nuneaton saw the highest fall – a 26.7 per cent drop.
At best, the region’s top performers saw rents flat-line. In Birmingham (£275 per sq ft), Solihull (£195 per sq ft) and Sutton Coldfield (£105 per sq ft) rents plateaued. West Bromwich and Dudley also enjoyed a welcome respite from falling rents, though their average rents – of £50 per sq ft and £30 per sq ft respectively – are comparatively low.
Nuneaton saw the biggest decline. Average rents in the Warwickshire town dropped from £75 to £55 per sq ft over the last year. Kings Heath posted a 16.7 per cent drop, from £60 to £50 per sq ft; neighbouring towns Bromsgrove and Droitwich both slid by 12.5 per cent from £40 to £35 per sq ft each, while market town Evesham saw an 11.1 per cent drop from £45 to £40 per sq ft.
Although West Bromwich and Dudley escaped the move south, in Wolverhampton rents went the same way as the city’s fooball team. A 5.3 per cent drop in prime rents means rents there are now £90 per sq ft compared to £95 per sq ft last year.
Taking a five year average – from the start of the recession in 2008 – rents across the board have fallen. Since the start of the recession rents in the region have fallen by an average of 25 per cent. Rents have declined across all of the UK regions: only London has seen growth.
Nuneaton is the biggest loser, shaving a massive 54.2 per cent off its rents. Bromsgrove, Rugby, West Bromwich and Dudley all lost more than 40 per cent; Wolverhampton and Sutton Coldfield fell by 30.8 per cent and 22.2 per cent respectively.
In 2008 rents in Birmingham were the highest in the region at £325; they remain the highest, but at £275 per sq ft they have fallen by more than 15 per cent. Only two of the region’s shopping centres – Solihull and Stratford-upon-Avon posted single figure declines at 7.1 per cent and 3.7per cent.
Nick Round, national head of shopping centre leasing at Colliers International, said: “You don’t need to be a retail expert to know that the High Street has been hard hit during the recession. We’re all consumers and on the whole we are buying a lot less. What’s more, when we are buying, a lot more of it tends to be online. It’s no wonder that landlords are struggling to hang on to tenants and consequently are having to recalibrate their rents according to the market.”
Despite this, there is a healthy pipeline of retail floorspace under construction in the West Midlands. 160,000 sq ft is being added to Birmingham’s retail offer at Grand Central, anchored by John Lewis and delivered next year. West Bromwich’s New Square is a massive 440,000 sq ft of new space, completed this year, while 160,000 sq ft will help beef up Longbridge’s shopping credentials by 2015. Hereford’s retail quarter will add 310,000 sq ft of new space in the next 12 months.
Mr Round said: “Although the West Midlands has seen average rents decline the pipeline of new space – more than any other region in the UK – shows that investors have not lost confidence.”
