8th May 2020 05:00
(Alliance News) - Vacancy rates across UK retail locations inched up in the first quarter of 2020, with Friday's numbers, highlighting challenges the sector faced even before the Covid-19 lockdown darkened the high street.
According to the BRC-LDC Vacancy Monitor, the vacancy rate edged up to 12.2% in the quarter ended March, from 12.1% at the end of December.
On high streets, the vacancy rate stretched to 12.3% from 12.1% though more promisingly, shopping centres registered a slight improvement to 14.1% from 14.4% in December.
Retail parks had the lowest vacancy rate among the main categories, though it crept up to 8.2% in March from 8.1% in December.
BRC Chief Executive Helen Dickinson said: "For some time retail parks have been faring better than high streets and shopping centres as consumers took advantage of free parking and larger stores."
These are inaugural figures from the monitor, created in partnership by the British Retail Consortium and the Local Data Company.
The figures are released as UK retailers and consumers alike grapple with the Covid-19 pandemic.
Late in March, the UK government imposed a lockdown in a bid to halt the spread of the deadly virus-borne disease. It meant retailers not offering essential services were forced to close.
The analysts noted the first quarter "does not reflect the changes as a result of the coronavirus pandemic".
Dickinson added that the gap in vacancy rates between retail parks and the other destinations will widen further. She noted retail parks often include larger supermarkets, which have remained open due to the need to provide essential services.
Dickinson added: "Despite government support, it is likely that some stores may not be able to reopen after the lockdown is lifted, and the vacancy rate may rise sharply in the future as a result.
"While the government furlough scheme, loans and business rates holiday have provided an essential lifeline for thousands of retailers, stores continue to face fixed costs such as rent, which threaten their existence. To protect jobs and ensure the economy is able to get back on its feet in the coming months, it is vital that the UK follows the lead of other European countries and supports rents."
Even before the Covid-19 pandemic, conditions where tricky for UK retailers, due to shifts in consumer spending patterns and economic uncertainty.
This has led to some high street names such as department stores Debenhams and Beales and fashion retailer Karen Millen falling into administration, the latter rescued by online-only outfit boohoo Group PLC back in August.
Many retailers also have resorted to company voluntary agreements. These are insolvency arrangements used to reduce rent bills.
Lucy Stainton, head of retail & strategic partnerships at LDC said: "The inaugural BRC-LDC Vacancy Monitor shows a consistent increase in the number of stores lying empty overall, which indicates that the UK now has more retail space than is necessary to meet our changing consumer habits.
"Given the pandemic, as well as the CVAs and administrations that have already taken place, plus the huge challenge to cash flow for all of the non-essential businesses forced to close, we are predicting that the vacancy rate will increase on a much steeper trajectory than originally anticipated this year."
By Eric Cunha; [email protected]
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