City crowned ‘retail capital of the north’
MANCHESTER has been crowned as the retail capital of the North West after being the only urban centre to enjoy substantial rental growth in the entire region in the last 12 months.
The latest Midsummer Retail Report (MSRR) by real estate advisors Colliers International highlighted an 8% growth in average rents to £270 per sq ft.
The hike in retail rents was largely because of increasing demand from retailers wanting to open bricks and mortar premises in the city – such as the recent launch of H&M-owned sister brand & More Stories on Exchange Street, just off St Ann’s Square.
Meanwhile, retail rents in Liverpool remained stable at £265 per sq ft over the period while the other 37 locations surveyed by Colliers International in the North West recorded slight positive rental growth of 0.3% as a whole to an average of 87 per sq ft.
The only centres where retail rents continued to fall were Southport, where rents declined by 10% and Bolton, which saw a 5% drop – primarily because of a continued over supply of available property and intense competition from competing retail and leisure destinations.
The MSRR revealed that less than 1% of prime floorspace equating to just three shop units were available in Liverpool – reflecting ongoing demand from retailers for a physical presence in Liverpool One in particular – while vacancy rates in the city as a whole improved from 10.6% to just 8.4% of available space.
Whilst not covered in the Colliers’ research, the firm’s agency teams confirm that the trend of declining vacancy in Liverpool has been replicated in Manchester over the past two years with this conclusion backed up by third party sources reporting that voids in Manchester are at a seven-year low.
Colliers reported that major shopping centre development was once again on the agenda, with councils such as Cheshire East and Stockport taking responsibility for their own projects to plan for the future.
Regeneration has become a key theme as developers, councils and shopping centre owners seek to create 21st century destinations.
The most significant of four retail warehousing schemes of more than 100,000sq ft coming to the region is Edge Lane Retail Park, Liverpool which will provide 110,000sq ft of space via phase one in 2017 and a total of 450,000 to 500,000sq ft on completion.
According to the MSRR, retail rents in the North West were marginally higher than those for Great Britain excluding London at an average of £86 per sq ft while the national average including the capital stood at an average of £136 per sq ft.
The entire analysis of a total of 421 retail locations nationwide showed an improving rental outlook with prime rents either stabilising or growing in 95% and just 23 experiencing a decline.
In terms of vacant plots the research did however identify a strengthening trend of persistent vacancies – with the proportion of units without a tenant for more than two years rising to 23% from 21% and the percentage standing empty for between one and two years increasing from 15% to 24%, thereby showing that many retail units are no longer fit for purpose.
The recent high profile failures of BHS and Austin Reed mean that both prime and secondary retail vacancy rates would be affected adversely, the report noted.
Although more than 10 million sq ft of shopping centre development is in the planning pipeline, Colliers warns that many such schemes will never be delivered because they are no longer viable with retailers curbing plans for physical expansion and the inexorable rise of online retail.
The MSRR reported that out-of-town shopping complexes such as Trafford Centre were increasingly popular destinations for consumers because of their appealing combination of free parking, enhanced food offering, the availability of click-and-collect services and rising demand for units from retailers.
David Fox, head of retail agency North at Colliers International, said: “We are continuing to see an evolution in the retail sector across the North West particularly where the consumer can enjoy a combined retail and leisure offer. It is significant that the development pipeline continues this trend as the increase of long-term voids indicates that a combined approach to obsolete stock is vital to regenerate struggling high streets.”