West Mids retail rents take a hit

Retail rents across the West Midlands have fallen by 3.4 per cent in the last year according to Colliers International’s annual Midsummer Retail Report.

Of the 33 regional shopping centres and high streets surveyed, just one – Lichfield – saw rents rise. The

cathedral city saw a 6.7 per cent increase in rents over the last year, with average rents now £80 per sq ft.

The biggest faller was Rugby, where rents declined by a staggering 15.4 per cent. Rents are now £55 per sq ft in the market town. High vacancy rates at the Swan Centre, which is anchored by ASDA, are a contributory factor.

In all, 17 shopping areas saw a decrease in rents, with 15 remaining stable. Overall, the average rent in the region is £90.8 per sq ft, compared to the national average of £109.80.

The top rents are being achieved in major city centres and out-of-town malls. Birmingham city centre tops the rent table in the region, at £275 per sq ft.

Merry Hill wins silver medal, at £240 per sq ft, with Solihull in bronze position at £195 per sq ft.

The Black Country towns of Dudley and Stourbridge are achieving the lowest average rentals, at £30 per sq ft for their shopping space. Stourbridge has at least maintained its rental levels from last year, and rises are anticipated next year as a result of void space at the Ryemarket shopping centre reducing over the last couple of years and rents of £40 per sq ft being achieved there.

Dudley has recorded a 14.3 per cent decline, second only to Rugby’s, and continues to suffer from the “Merry Hill effect”.

The overall regional decline of 3.4 per cent compares with a national average of 1.2 per cent. Neighbouring East Midlands saw a fall of 5.7 per cent.

According to Nick Round, the Birmingham-based national head of shopping centre leasing at Colliers International, the research demonstrates that the gulf between the performance of major city centres and out-of-town malls, and traditional high streets, continues to widen.

He said: “The retail sector as a whole is in challenging times. Retailers are under attack from reducing disposable incomes and competition from new channels, such as the internet and TV.

“For traditional high streets in secondary locations, competition from city and town centres and out-of-town shopping malls can be added to this. Shoppers now expect a complete leisure experience, incorporating a wide variety of entertainment, food, drink and retail brands. City centres and dedicated malls are in a better position to offer this. Traditional high streets just can’t compete – they lack the variety of stores, are often difficult to access and expensive to park in and simply just aren’t exciting enough.”

As well as being a black hole for shoppers, traditional high streets are also being shunned by investors.

Nick Round said: “Major regional centres, accessible out-of-town locations and convenience shopping venues are casting a long shadow over traditional high streets. Investors can’t see a return so won’t plough any money in. Despite the hype around Mary Portas’ high street review, some areas of secondary towns are likely to fall out of retail use forever.

A number of high profile failures, such as Clintons, Game and Focus DIY, and consolidation programmes, such as Currys/PC World, mean that vacancy rates across the country have risen and are now at 3.9 per cent, just above the long term average.

This has helped to suppress the development pipeline. In town, no new shopping centres are due to open in 2012. Established shopping destinations, however, are likely to extend their offer. The addition of a John Lewis store in Birmingham is a case in point.

Retail space rents: West Midlands

Centre	2011 per sq ft	2012 per sq ft	%Change
Birmingham	275	275	0.0
Bromsgrove	45	40	-11.1
Burton-upon-Trent	100	95	-5.0
Cannock	55	50	-9.1
Coventry	155	150	-3.2
Droitwich	40	40	0.0
Dudley	35	30	-14.3
Evesham	50	45	-10.0
Halesowen	50	50	0.0
Hereford	100	95	-5.0
Kidderminster	60	55	-8.3
Kings Heath	60	60	0.0
Leamington Spa	120	120	0.0
Lichfield	75	80	6.7
Merry Hill	250	240	-4.0
Newcastle-under-Lyme	55	50	-9.1
Northfield (Birmingham)	45	45	0.0
Nuneaton	85	75	-11.8
Redditch	90	90	0.0
Rugby	65	55	-15.4
Shirley	45	45	0.0
Shrewsbury	110	110	0.0
Solihull	195	195	0.0
Stafford	70	65	-7.1
Stourbridge	30	30	0.0
Stratford-upon-Avon	140	130	-7.1
Sutton Coldfield	115	105	-8.7
Tamworth	75	70	-6.7
Telford	135	135	0.0
Walsall	85	80	-5.9
West Bromwich	50	50	0.0
Wolverhampton	95	95	0.0
Worcester	145	145	0.0

 

WEST MIDLANDS average	93.9	90.8	-3.4
ALL GB average	111.1	109.8	-1.2

Retail space rents: Regional averages 

Region	2011	2012	%Change
East	81.8	81.1	-0.9
East Midlands	77.6	73.1	-5.7
North East	75.8	70.8	-6.6
North West & Mersey	97.3	92.9	-4.5
Scotland	83.7	81.7	-2.4
South East	106.9	105.2	-1.6
South West	89.2	84.9	-4.8
Wales	68.1	62.4	-8.4
West Midlands	93.9	90.8	-3.4
Yorks & Humb	129.0	126.7	-1.8
All GB	111.1	109.8	-1.2

 

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