Vacant shop units remain ‘stubbornly high’
A rush of festive shoppers was not enough to dent the number of empty units with one in six still unoccupied, according to new data.
The vacancy rate remains higher than before the pandemic as the pre-Christmas ‘golden quarter’ did not deliver temporary lettings.
In the final months of 2022 the Scottish vacancy rate was 15.7% for the third consecutive quarter and just 0.4 percentage points better than the same point in 2021.
Shopping Centre vacancies remained unchanged at 20.5% while vacancies on the high street worsened to 14.8% in Q4, from 14.7% in Q3. Retail Park vacancies improved to 9.8% in Q4 2022, compared to 11.0% in Q3 and remains the location with the lowest rate.
Across Britain, southern areas fared better than other parts of the country. In the fourth quarter of 2022, the overall vacancy rate improved to 13.8%, which was 0.1 percentage points better than Q3 and 0.6 percentage points better than the same period last year. This was the fifth consecutive quarter of falling vacancy rates.
Helen Dickinson, chief executive of the British Retail Consortium, said retail occupancy was boosted by the return of international tourists and more frequent visits to offices.
“These trends have given many retailers the confidence to invest in repurposing and reopening empty units. The North East, in particular, has benefitted from this investment boost, with the region seeing the biggest increase in store openings. However, it still lags behind other parts of the UK, with the highest vacancy rate in the country (18.2%).
Of 11 areas across Britain monitored jointly with the Local Data Company, Scotland’s vacancy rate was 8th highest. David Lonsdale, director of the Scottish Retail Consortium, said: “There was little sign of any improvement to the shop vacancy rate resulting from the ‘golden quarter’ in the final months of 2022, a period which traditionally benefits from pop-ups and temporary lets in the run up to Christmas.
“Scotland’s vacancy rate has plateaued over the past three quarters and seems stubbornly stuck at a fifth higher than during pre-pandemic times. Whilst there has been a small improvement over the past year the fact is Scotland’s store vacancy rate is above that for Great Britain as a whole, with one in six stores lying empty. The volume of empty units is especially marked in shopping centres.”
He added: “The fallout from the cost-of-living crunch and pandemic is exerting a heavy toll on retail destinations, as does what increasingly looks like a sustained shift towards hybrid working. This could make it trickier for store vacancy rates to ever fully recover. “
He said the burden of business rates remains onerous and over 2,000 medium-sized and larger retail premises continue to pay a higher business rate than counterparts or competitors south of the border.
“Business rates need recast for the years ahead, beginning with a timetable for returning the poundage to a permanently lower level and faster restoration of the level playing field with England on the higher property rate,” he said.
Vacancy rates across Great Britain
CBI figures published yesterday showed retailers began the year on a disappointing note, reporting that sales volumes fell at a fast pace in the year to January. Sales are expected to decline again next month, but at a slightly slower pace.
Martin Sartorius, principal economist at the CBI, said: “With consumer spending expected to fall throughout 2023, it’s important that the Government addresses the structural problems holding back retailers. Reforming business rates and the Apprenticeship Levy would unlock much-needed investment and help the UK avoid getting stuck in a rut on growth.”
In addition, the latest survey data showed:
- Internet sales volumes declined in the year to January, but at a slower pace than last month (-4% from -22% in December). Sales are expected to grow next month (+4%), which is the first month with expected sales growth since December 2021.
- Elsewhere in the distribution sector, wholesale sales volumes fell in the year to January (-18% from -14% in December) and are expected to decline at an accelerated rate next month (-22%).
- Motor traders’ sales continued to fall quickly in the year to January (-34% from -25% in December), but the pace of decline is expected to ease next month (-11%).