Liverpool remains a strong retail target, but incentive periods are growing, according to the annual Retail Market Overview report, due out next week.
The study, commissioned by agent Colliers CRE, confirms that Liverpool city centre is able to command the second highest commercial property rents on the region, with top rents charged at £320/sq ft – £80/sq ft behind the Trafford Centre, but £20 above prime rental values in Manchester city centre, which ranked third in the report.
Grosvenor's Liverpool One development, the first phase of which opened in May, boosted the region's reputation as a retail destination, bucking the national downward trend in retail and trading, but it has not been able to sustain its headline rent in more recent lettings, and the report indicates that incentive packages are likely to increase, particularly for smaller, independent retailers.
New Mersey Shopping Park in Speke was named as the region's out-of-town retail location able to charge the highest rental value, with rents of £55/sq ft.
The report also showed that:
• Between May 2007 and May 2008, prime in-town retail rents in the North West rose, on average, by 2.7% – an improvement upon last year's increase of 1.8% and well above the UK average of 1.1%. This places the region at the top of the regional ranking for 2007/08.
• In terms of real rental growth, however, the region experienced a rental fall of -1.6% over the 12 months to May 2008, although this is much better than the UK average of 3.1%.
• As of May 2008, the shopping centre development pipeline for the North West to 2013 stood at 7.9 million sq ft – 16% of which was under construction, 40% had planning consent and 44% was at proposal stage.
• Bolton saw the highest annual rental growth in the out-of-town retail market of 36.8% at Middlebrook Retail Park, rising to £39/sq ft as of May 2008.
Overall, the outlook reported for the North West as a whole was positive, with prime rents increasing at 38% of centres in the region during the 12 months to May 2008, up from 31% last year. No centres experienced a fall in prime rent.