The retail sector in the North West of England suffered among the highest rental declines in the UK between 2018 and 2019, according to the latest Midsummer Retail Report (MRR) by real estate advisors Colliers International.
The firm’s annual sector-leading research showed a 7.83 per cent drop in prime retail rent across the region in the past 12 months, taking the average Zone A rent down to £78 per sq ft from £85 per sq ft.
The decline in the North West between 2018 and 2019 accelerated by 6.3 per cent from 1.5 per cent in 2017 to 2018, reflecting the fading fortunes of retailers faced with a range of pressures and issues.
Colliers’ analysis in the MRR showed the fall in North West retail rental levels was the fifth highest of 12 regions, with Outer London, Scotland, the South East and Wales having higher declines.
The North West decline was higher than the national average of 7.01 per cent and a national average excluding London of 7.68 per cent, according to Colliers.
For example, Colliers reported that while rents at intu Trafford Centre remained flat and declined in Manchester and Liverpool, those in so-called secondary shopping centres such as Bolton, Blackpool and Oldham suffered double digit drops.
Although some retailers continue to take physical space, these acquisitions are focused entirely on major centres, such as Japanese fashion chain Uniqlo occupying the former BHS store on Market Street, Manchester.
Lloyd Entwistle, director, retail agency at Colliers International, said: “While there are a variety of pressures on retailers which continue to squeeze profit margins, the continued structural change in the retail marketplace is the driving force creating a significant imbalance of supply and demand.
“There is just too much space in many locations in the North West and elsewhere around the country and we are seeing more of it come back to landlords. The major cities and schemes, as we have seen over the past few years, will continue to be the winners.”
He said ‘pockets’ of space in affluent and attractive market towns such as Wilmslow and Altrincham will enjoy continued demand from retailers trading well and making profit, but even in the very best markets, Colliers is dealing with vacant space that will not be re-let as retail.
Lloyd said: “We are working on sites across the region to find alternative uses for redundant retail space left by department stores such and hotels, offices, residential and retirement living.
“Consequently, the North West and other regions need to re-think retail and find a solution to move forward and regenerate failing town centres.”
Key factors affecting retailers with bricks and mortar store portfolios include the ongoing migration of shoppers to online causing footfall to decline, rising business rate and staff costs and cautious consumer spending affected by prolonged political and economic uncertainty caused by Brexit.
On a national basis, the Midsummer Retail Report suggested that the ‘golden age’ of online retail was coming to an end with evidence of a ‘crackdown’ on free delivery, supermarkets making a loss on online grocery, and a growing perception that online delivery fulfilment is harming the environment and increasing ‘product miles’.
The research also showed that a rising number of landlords were investigating how to integrate ‘shopping that supports a cause’ to reflect trends such a sustainability, climate change and the international refugee crisis.