Midlands’ secondary shopping locations in decline

 

 

 


Birmingham city centre’s future as a major shopping destination is secure, despite the recent turmoil in the retail sector.

According to property consultancy Colliers International’s annual Midsummer Retail Report, choice, the newest brands, entertainment, diversity and novelty fuel the success of the most sought-after destinations. According to Nick Round (pictured), Colliers’ Birmingham-based national head of shopping centre leasing, these are all boxes Birmingham can tick.

He said: “Birmingham’s Bullring is a case in point. It scored a major coup when the American clothing retailer Forever 21 opened its first store here. New names such as Hollister are also proving a draw for shoppers, whilst the extension of the restaurant quarter gives the Bullring’s shopping offer that vital extra dimension.

“The fact that John Lewis has committed to the city centre is also a major feather in Birmingham’s cap and will ensure the city remains on the shopping lists of those retailers who emerge the other side of the recession.”

Birmingham also makes it into the global top 50 premier fashion retail corridors. The city’s prime shopping streets, High Street/New Street rank 49th; the only other UK regional city to make the list is Manchester, at 46.

According to the ranking, rents in Birmingham are averaging £139.60 per sq ft. At the top of the chart, New York’s Fifth Avenue commands a massive £1,337.70 per sq ft, while London’s Old Bond Street – placed fourth – achieves £598.65 per sq ft. Manchester’s Market Street fetches £149.60*.

Outside the city centre, however, the picture is grim, with Colliers predicting that many suburban High Streets will become obsolete and may never return to retail use.

According to the Colliers report, shoppers are deserting secondary town locations in favour of city centres and the internet, with £1 in every £7 now being spent online.

Nick Round said: “The retail sector is going through a period of massive turbulence, with Jane Norman, Homeform (owners of Moben and Kitchens Direct), TJ Hughes and Habitat all going into administration within a week, and Thorntons proposing major downsizing.

“However, whilst changes in the retail landscape are inevitable, city centres are best placed to attract shoppers’ cash.

Some parts of the West and East Midlands have seen dramatic declines in average in-town prime rental growth. As a result, the regions are the worst performing in the country.

Only London saw rental increases in the last year, with all other regions losing ground. The West Midlands saw rents fall by just over four per cent; in the East Midlands the slide was even worse, approaching six per cent.

Nick Round said: “Whilst we have beacons of success, like the Bullring, outside the city centre secondary locations are struggling. They are becoming populated with banks, charity shops, discount retailers and the odd independent. The major brands no longer want a presence here because the footfall simply isn’t good enough.”

The Black Country town of West Bromwich is one of the worst performing locations in the UK. Prime retail rents there dropped by a staggering 28.6 per cent to £50 per sq ft.

Out-of-town development across the country was at an all-time low in 2010, due to the lack of finance and occupier demand.

Activity is not expected to improve much in 2011. However, of the 600,000 sq ft of out-of-town retail space that is anticipated to be built over the next year, some 80,000 sq ft will be in the Midlands. Royal London Asset Management’s Tamworth scheme is anchored by a 45,000 sq ft pre-let to B&Q, the DIY store’s first acquisition since the recession.

The Junction, in Oldbury, is also being revisited, but is unlikely to get off the ground unless a food store anchor is found.

Despite the East Midlands’ poorly performing retail rents, developers in Nottingham also appear to be bullish: there is a major extension planned at the Victoria Centre, whilst Westfield has the green light for a comprehensive extension and refurbishment of the Broadmarsh Shopping Centre.

Some Midlands-based retailers are bucking retail trends.

Poundland, based in the West Midlands, is proving a star performer in austerity Britain. However, the discount store’s quest for a store on every High Street – it has a requirement for 85 new shops – often puts it in direct competition for the same stores as its competitors 99p Stores and Poundworld, leading to bidding wars and artificially driving up rents. As a result, landlords who were once slightly “sniffy” about the value retailers are now putting out the welcome mat.

Next, based in Leicester, has seen growth of just 0.9 per cent from its traditional stores; however, sales on Next Directory have forged ahead at 14.8 per cent.

In contrast, after a series of profit warnings, Alfreton-based Thorntons has announced plans to axe 180 shops – almost half of its UK chain. The chocolatier is planning to focus on the top 100 locations.

Despite the recent wave of retail administrations, concerns over interest rate hikes, overzealous fiscal cuts and Eurozone mayhem, according to the Colliers’ report consumer confidence is actually on the rise and household spending is forecast to improve over the next two years.

In the East and West Midlands, per capita spend during 2010-2011 grew by 0.9 per cent. The North West and North East have fared much worse, experiencing declines of 1.3 per cent and two per cent respectively.

Mr Round said: “Although consumer demand is likely to remain subdued, the fact that spend has increased in the East and West Midlands, even in these testing times, gives hope for the future”

 

 

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