Rental levels in the North West's retail sector increased by just 1.8% in the past year, according to a new report from Colliers CRE.
Colliers CRE's North West in Town Retail Report 2007 found that the region's average price/sq ft in prime locations increased from £94/sq ft to £96/sq ft in the year to May. The findings show a rental growth slowdown from 2.5% in 2005/06. The increase is well below the national average growth of 2.8%, where prices have risen from £114/sq ft to £117/sq ft.
The highest rent was again at The Trafford Centre, which achieves rentals of £375/sq ft in Zone A, retaining the number one spot in the list for the fifth consecutive year, followed by Liverpool city centre in second place and central Manchester in third.
Liverpool continues to be able to charge £320/sq ft in hotspots such as the junction of Lord Street and Church Street, while the prime location of Market Street in central Manchester has remained static at £300/sq ft for the past five years.
Within the North West, smaller towns such as Middleton and Wallasey saw the healthiest rental growth over the past year – revealing a rise in both cases of 16.5%, with rents increasing from around £60/sq ft to £70/sq ft.
Morecambe's Arndale Centre has performed particularly well, achieving a prime rental growth of more than 28.6%.
Despite the positive findings, however, Nick McAllester, head of retail agency at Colliers CRE in Manchester, was unsure that the demand on retail property is strong enough to meet the vast supply available.
He warned: "Whilst the shopping centre development pipeline remains strong in the North West – with more than 8m sq ft planned by 2012, 2.5m sq ft of which is already under construction – a question mark remains as to whether there is sufficient demand from occupiers, especially as many are adopting a more cautious attitude in their expansion plans.
"Landlords have had to be more flexible in order to attract tenants and incentive packages equivalent to two years' rent are not uncommon and nor are they restricted to those taking larger units. Yet this is not always the case as mobile phone, greeting card, bookmaking and poundshop sectors have continued to be aggressive in their acquisitions and often out-bid competitors."
Top ten rented shopping centres in the North West (figures show £/sq ft)
1. Trafford Centre 375
2. Liverpool 320
3. Manchester 300
4 .Chester 210
5. Stockport 190
6. Warrington 145
7.= Bolton 140
7.= Carlisle 140
7.= Preston 140
10. Blackburn 135