More than one in 10 UK stores could remain vacant in the long term, setting a new void level of 11% compared to 6% to 7% before 2007, according to retail property organisation BCSC's latest report, published at the annual conference in Manchester on Tuesday.
The British Council of Shopping Centres predicts vacant units will peak at 13% to 14% in the immediate future, before falling to around 11% in the long run. Vacancy levels are higher in the North, around 20% in some towns, than in the South.
The biggest retail property event in the calendar is being held in Manchester Central for the third year running – and will return to Liverpool, where it was held in 2008, in 2012.
The exhibition hall is sold out, with 86 stands taken by developers, agents, retailers and suppliers. The mix of exhibitors is less dominated by discount retailers than in 2010. However, anecdotal evidence from delegates suggests there are more meetings taking place outside the official conference space to save on the cost of a delegate pass, £999 for BCSC members and £1,450 for non members.
BCSC's research identifies demographic change, the rise of internet retailing – now approximately 10% of retail sales – and the expansion of supermarket chains as key drivers for rising retail vacancies, in addition to the current difficult economic climate.
The growth of shopping centre space since the 1980s, with tenancies on 25-year leases, is also highlighted as a contributing factor. Many retail groups are not renewing their leases – Arcadia is said to have 200 lease expiries a year in the next few years and will not be renewing anywhere near all of them.
In response to the report's findings, BCSC is calling on communities, businesses and local government to be creative in generating new ways of utilising empty space.
Richard Akers, BCSC president and managing director for retail at Land Securities, said: "Boarded up shops are the most prominent symptom of the plight of some town centres, the state of which has been magnified by a number of high-profile reports in recent weeks, and of course by Mary Portas' appointment by Government.
"The problem, whilst clearly exacerbated by the economic downturn, is a structural one, and with this research we're hoping to move the debate on to focus on how we can bring unoccupied retail space back into use in the long-term, or put it to alternative uses."
The report calls for Government to make a strong commitment to town centres as a focus for investment as part of the proposed National Planning Policy Framework, and argues the business rates regime acts as a barrier to retail growth.
Akers continues: "UK business rates must be urgently reviewed if retail businesses are to survive and compete with rising online sales on an even footing. Likewise, the imposition of empty rates on even the smallest properties is hindering owners' investment in their properties, and therefore their ability to work with town centre managers in developing centres that meet residents' needs."
BCSC suggests that some town centres could benefit from a reduction in the total amount of retail space – particularly where the units are small, old-fashioned and or poorly configured. However, it argues this should be part of a carefully managed strategy to provide a mix of property types, and be consistent with local plans.