Today The Local Data Company’s latest report on vacancy rates entitled ‘Mind the Gap’ will be presented at LDC’s 11th Retail Summit at the offices Freshfields Bruckhaus Deringer in London. It analyses over 3,000 town centres, shopping centres and retail parks. The report analyses retail and leisure vacancy rates in the second half of 2014 to deliver insight on the health of Britain’s towns, retail parks and shopping centres.
Shop (retail) vacancy rates have shown marked improvement towards the end of the year from their peak of 14.6% in February 2012 to 13.3% in the second half of 2014. The annual change has been an improvement of -0.7%.
Whilst the national picture is one of improvement this masks significant national and regional differences. For the first time since 2008 the worst English region is no longer the North West but is now the North East with a shop vacancy rate of 18.8% (-0.3% on H2 2013). The North East, North West, and West Midlands all have shop vacancy rates double that of London with Yorkshire and the Humber not far behind (see table 1). On average one in 10 shops lie empty in the south whilst in the north the figure is double at 1 in 5.
Nationally, Wales is a significant outlier with its average vacancy being c.3% more than that of England and Scotland. However, whilst England and Scotland have shown the same marginal improvement in the last 12 months Wales has achieved improvement in excess of 1%.
|SHOP||H2 2014 (%)||12 month change (%)|
|East of England||12.3||-0.5|
Table 1. National and Regional SHOP (Retail) Vacancy rates H2 2014
Retail and leisure vacancy rates
In light of the increasing importance of leisure uses (food, beverage and entertainment uses) LDC has been tracking the all vacant premises (retail and leisure) since January 2013 as this provides a more accurate picture of modern occupancy profiles
The overall vacancy rate (retail and leisure uses) improved from 12.3% at the end of 2013 to 11.8% at the end of 2014 (-0.5%). England’s vacancy rate improved from 12.1% to 11.7% during the year with Scotland close behind at 11.9% and Wales some way behind at 14.8% BUT showing the most improvement on 2013 at -0.9%.
The North/South divide amongst the English Regions evidenced in previous reports is still clear with southern centres being on average 5% better than northern centres (see table 2).
Change over the last 12 months is varied with the North West surprisingly showing the greatest improvement at -1.0% (16.3%) and the West Midlands and Yorkshire and the Humber competing for the greatest decline at +0.3% each.
The North West, for the first time, has been replaced by the North East as the highest vacancy region at 16.8%. Outside of the London bubble at 7.8% are the South West and South East who are both below 11% with the East of England just outside at 11.1% and the East Midlands standing at 13.5%. Thereafter all the three remaining regions (West Midlands, North West and North East) sit above 16%.
|RETAIL & LEISURE||H2 2014 (%)||12 month change (%)|
|East of England||11.1||-0.4|
Table 2. National and Regional RETAIL & LEISURE Vacancy rates H2 2014
Of the top 10 worst town centres for vacant retail and leisure premises, all of whom are above 26%, five are in the West Midlands, three are in the North West with Wales and the North East having one a piece. Conversely, of the top 10 best performing town centres with the least vacant units, six are in Greater London and the South East.
Small towns (<200 units) continue to have the lowest vacancy average at 9.2% (+0.2% on H2 2013). Medium towns (200-400 units) have improved slightly to 11.7% (-0.1%) and large towns/cities continue to have the highest overall vacancy rate at 12.8% but have shown the greatest improvement (-0.6% on H2 2013). Overall Retail Parks have the lowest average vacancy rate 8.0% (-0.9% on H2 2013) and Shopping Centres continue to have the highest vacancy rate average at 15.2% (-0.2% on H2 2013).
Performance by type of centre
Vacancy by type of location provides an interesting comparison. Retail Parks show the lowest overall vacancy, followed by small towns. Large centres and Shopping Centres show the highest level of vacancy overall (see table 3).
|Location Type||2014 Average Vacancy Rate % (H2 2013)|
|High Street- Large Towns||12.8 (13.4)|
|High Street- Medium Sized Towns||11.7 (11.9)|
|High Street- Small Towns||9.2 (9.0)|
|Shopping Centres||15.2 (15.4)|
|Retail Parks||8.0 (8.9)|
Table 3. Average RETAIL & LEISURE vacancy rate, by location type.
Overall highest and lowest vacancy towns
The highest vacancy towns (see table 4) are all in the West Midlands and the North. Whilst some have seen significant improvements and others further decline they all have more than one in four units lying empty.
Table 5 shows the lowest vacancy towns. All of them, with the exception of one, are in Greater London or the South East.
|Region||Town||Vacancy %||12 Month Change %|
|West Midlands||West Bromwich||27.1||0.5|
|North West||West End, Morecambe||26.8||-6.1|
Table 4. Highest RETAIL & LEISURE vacancy (all centres)
|Region||Town||Vacancy %||12 Month Change %|
|East Of England||Debden||0.0||-2.0|
|East Midlands||Eastgate, Lincoln||1.3||0.0|
|Greater London||West Wickham||1.4||-2.1|
|Greater London||Askew Road||1.8||0.0|
|South East||Oxford, Summertown||1.9||-1.8|
Table 5. Lowest RETAIL & LEISURE vacancy (all centres)
- In H2 2014 the GB retail and leisure vacancy rate reduced from 12.3% in H2 2013 to 11.8% (-0.5%)
- The number of vacant premises in the top 650 town centres numbered 25,489 (-768 during 2014). Overall across all locations tracked by LDC there were 49,538 (-993 during H2 2014) vacant premises at the end of 2014.
- Wales has the highest national vacancy rate at 14.8% (-0.9% since on end 2013)
- The best performing region by a long way is London at 7.8% (-0.3% on end 2013)
- The worst performing region is now the North East at 16.8% (+0.1% on 2013)
- The North West has shown the greatest improvement at -1.0% in 2014
- Shopping centres continue to have the highest overall vacancy rate at 15.2% (-0.2% on end 2013), followed by large centres at 12.8% (-0.6% since end 2013) and medium centres at 11.7% (-0.1% since end 2013), small town centres at 9.2% (+0.2% since end 2013) and retail parks at 8.0% (-0.9%)
- Retail Parks, whilst best performing overall, see similar differences to towns and shopping centres with 550 basis points difference between the highest regional retail park vacancy in the North West (11.4%) and the lowest in the South East (5.9%)
- Shopping Centre vacancy is clustered in the range between 12.9% (South East) and 19.4% (North West) with London (9.8%) being a significant outlier
Matthew Hopkinson, director at the Local Data Company, said: “During the second half of 2014 the average GB national vacancy rate continued to improve down to 11.8% which is -0.5% on the same period in 2013. Nationally we see England and Scotland neck and neck at 11.7% and 11.9% respectively but with Wales some way back at 14.8%.
“At a regional level the polarisation between the North and the South is as wide as ever with London’s vacancy rate being less than half that of the northern regions. Of the top 10 highest vacancy towns in the country all are in the North, West Midlands or Wales. Whilst we have seen an improvement from the peak in 2012 when these towns had one in three shops empty, these towns all have vacancy rates above 25% which is still one in four shops lying empty and no sign of improvement.
“Not only is the level of vacancy an issue, but of more significance in my view is the persistence of that vacancy. For example in the largest towns (400+shops) with the highest vacancy rate, 70% of those vacant units have remained empty for more than a year. Such analysis at town, shopping centre and retail park level gives the most realistic view about the over supply of retail and leisure premises up and down the country. Analysis by LDC at the end of 2014 showed that of all the vacant units tracked 20% of these had been vacant for more than three years. LDC data identifies 49,538 vacant units across the country, which therefore implies that 9,908 are never going to be re-occupied. This is the equivalent of five Manchester’s lying empty.
“2015 will be a significant year for retail places and we have already started to see the impact of the supermarkets’ decline with Tesco and Morrisons announcing store closures and a hold on any further development. Whilst the numbers announced to date are small beer to the totals, the significance lies with the fact that whilst traditional shops have been closing it has been the supermarkets and convenience stores that have been expanding significantly which has kept the occupancy rates balanced. The question as to who will occupy these newly vacant stores as well as those, which have been empty for a while is a very difficult one to answer positively.
“In April we see the start of the business rates revaluation, which will be based on rental values as at April 2015. One thing you can be sure of is that the market will change even more rapidly in 2015 than in 2014 with some places seeing rental increases and others continuing to fall. As such creating a relevant business rate for implementation in 2017 is a challenging, expensive but also a flawed task.
“One thing that is very transparent is how vacancy rates and occupancy profiles are changing location by location and this ultimately mirrors where and why businesses succeed or fail.
“The granularity of LDC data shows these changes from a shop all the way up to the nation and what is clear is that polarisation is alive and well, and growing. With one in four shops lying empty in the north and just one on ten lying empty in the South the evidence is clear to see. Mind the Gap.”