UK store vacancy rate plateaus but challenges remain

In the third quarter of 2021, the overall UK store vacancy rate weighed in at 14.5%, the same level as Q2. It was 1.3 percentage points higher than in the same point in 2020, according to research from the BRC and LDC.

No locations saw an increase in vacancies in Q3.

Helen Dickinson, Chief Executive at the British Retail Consortium, says: “While this is the first time in over three years vacancy rates have not risen, they still remain at a record high.”

“Retail parks remain resilient as the only location type that saw vacancies fall this quarter.”

“This is because many brands who have traditionally occupied shopping centres and high streets are opening stores in out-of-town locations to meet customer demand, and retail parks have become increasingly vital for supporting the expanding online services of some businesses.”

She adds: “Meanwhile, 10% of high street shops and more than 13% of retail units in shopping centres have remained empty for over a year, which is the result of the high costs of opening and running shops in many parts of the country.”

When stores are forced to close, it not only takes away much needed jobs, but also diminishes the vibrancy of those communities, Dickinson argues . This gives retail a vital role in supporting the government’s levelling up agenda.

However, business rates continue to pose a threat to the future vibrancy of hundreds of towns across the UK and without a reduction in the burden, many retailers are likely or certain to close some of their stores.

“Wednesday’s budget announcement fell far short of the truly fundamental reform that is needed, meaning we will likely see further loss of shops and jobs and it will prevent investment in many of the areas that need it the most,” Dickinson concludes.

Lucy Stainton, Director of Local Data Company, adds: “A return to growth for the independents sector is truly positive but somewhat offset by the challenges being faced by larger multiple retail and leisure brands, many of whom will still be exposed to a large perhaps unmanageable rates bill.”

“Added to this, a flattening off of vacancy rates does not mean that contributing activity levels are slowing by any means.”

“We are still seeing an incredible volume of businesses opening and closing, beneath these top-line stats, and this makes devising and implementing investment strategies whether you’re a landlord or a retailer, set against constantly shifting sands and supply side challenges, very challenging still.”

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