Tax & Accounting News

Retail Rents Set to Fall by a Fifth

24/06/2009

A report from retail property consultancy Colliers CRE has predicted rents across the UK’s high streets and shopping centres are set to drop by almost 20 per cent between now and the end of next year.

A combination of struggling retailers demanding cheaper deals to save cash and landlords desperate to keep their properties occupied during the recession has meant any prospect of a revival in the troubled retail property sector is still some way off.

Landlords already hit hard by a slump in business property values and the high-profile collapse of several retail chains are now being forced to offer concessions to lure tenants in, including rent-free periods of up to six years on long leases, Colliers said. This is despite the fact that many retail chains are still expanding – with up to 60 firms identified by Colliers as currently requiring new shops.

The report said overall average rental values are expected to fall by nine per cent in 2010, and 1.3 per cent in 2011, before returning to growth in 2012. It added that this was the first drop in prime rents since the recession of the early 1990s.