UK in the most challenging retail environment since 1991, says property expert

The UK is in the middle of the most challenging retail environment since 1991, with CVAs engulfing some of the sector’s best known brands, according to one of Yorkshire’s most prominent retail property experts.

Shoppers on Briggate in Leeds. UK's retail environment is the most challenging since 1991, according to Colliers International.
Shoppers on Briggate in Leeds. UK's retail environment is the most challenging since 1991, according to Colliers International.

Speaking at the presentation of Colliers’ latest Midsummer Retail Report in Leeds yesterday, Greg Styles, inset, head of the firm’s retail development team, said cautious consumer spending affected by prolonged political and economic uncertainty, caused by Brexit, was one of the key factors affecting retailers with bricks and mortar stores across the UK.

“The trials and tribulations of the UK retail sector have become somewhat emblematic of the wider problems brought about by continued political and economic uncertainty,” he added.

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According to the report, on the high street, especially in the fashion retail sector, there continues to be significant downward pressure on rents.

Analysis showed that average prime rents for retail space in Yorkshire over the last 12 months have dropped from £125 per sq ft to £117 per sq ft – a decline of 6.48 per cent.

This was slightly below both the national average of 7.01 per cent and the national average excluding London of 7.68 per cent, it said.

The ongoing migration of shoppers to online, causing footfall to decline and rising business rate and staff costs are also causing headaches for retailers.

However, as the report shows, Yorkshire has been less affected than some areas of the UK, according to Tom Cullen, Colliers’ director of retail agency in Leeds.

“There are glimmers of hope in the North, with a number new entrants to the market in some northern centres,” he said. “Fashion brands from Europe and London – including Ecco and ME+EM – are looking for stores in town centres in the North, however their requirements are very specific and the terms must be right.”

JD Sports took over a former H&M store on Briggate in Leeds last year, signing a 15-year lease on a rent of £273 per sq ft, he added.

Meanwhile, Matalan opened its first city centre unit in the North on The Headrow, Leeds, albeit at a reduced rent.

Sports Direct were previously paying £800,000 per annum for the unit and there were few options for the landlord to re-let the space until the Matalan deal, which sees the retailer paying less than half of Sports Direct’s previous rent, he said.

The report also said landlords can no longer rely on restaurant chains, which continue to slow down in all but the most desirable in and out-of-town pitches.

Mr Cullen said: “Only the right brands choosing the right spaces are thriving at the moment.

“For example, The Ivy has opened in Leeds within the last 12 months – located in Victoria Gate shopping centre, it continues to attract high footfall.”

In contrast, the number of new convenience stores is expected to rise “significantly” across Yorkshire over the next 12 to 18 months due to the amount of proposed new housing developments.

Mr Cullen said: “That’s going to be a big area of growth over the next three or four years.

“A lot of these schemes are 3,000-5,000 homes and becoming viable for a neighbourhood development from 2020 onwards.”

Co-op has been almost unchallenged in the convenience retail space in Yorkshire over the last few years.

However, following the end of the proposed Sainsbury’s-Asda merger, Sainsbury’s has started to ramp-up its convenience store acquisition programme once more, Mr Cullen added, while Tesco is also expected to add to its convenience store portfolio.