Bleak outlook as empty shops hit a record high

RETAIL has suffered the sharpest rise in property vacancies since records began, according to the Royal Institution of Chartered Surveyors.

It said 78 per cent of landlords had reported a fall in demand for retail premises during the fourth quarter – and described the outlook for the UK retail sector as “bleak”.

Retail’s collapse in demand – triggered by the pandemic – is mirrored in the office space sector.

With millions of Britons working from home, demand for office space has plummeted, down 63 per cent during the last three months of 2019.

RICS said the last time leasable office space was so readily available was after the global financial crisis.

Setback

The only area of the commercial property market doing well, it said, is industrial spaces. Forty-one per cent said they had seen increased demand.

That market has been particularly strong due to the extraordinary demand for online retail.

Tarrant Parsons, RICS economist, said: “With the UK economy facing a further setback towards the end of last year, hampered by a renewed tightening in restrictions, it is unsurprising that conditions remain challenging across portions of the commercial real estate market.

“Both the office and retail sectors continue to see occupier and investor demand diminish, with expectations for rents and capital values remaining deeply negative for the time being.”

He added that landlords are increasingly offering incentive packages to tenants in both the office and retail space sectors.

Yesterday, the British Retail Consortium said shop prices dropped 2.2 per cent in January, compared to 1.8 per cent last month.

Helen Dickinson, chief executive, said post-Christmas sales and the national lockdown had helped nudge non-food prices down.

The ongoing price war between the so-called Big Four supermarkets and the German discounters Aldi and Lidl has also kept a lid on food prices.