Signs of stabilisation as shop vacancy rates decline

Britain’s retail and leisure sector has seen the first half-year decline in vacancy rate since the first half of 2018, suggesting that the worst of the pandemic impact is over.

According to the analysis released today by the Local Data Company (LDC), the national vacancy rate declined by 0.1 per cent in the second half of 2021, from the previous half.

Over the full year, however, national vacancy rate increased by 0.7 per cent, although this figure is still lower than expected given the lack of activity in the first three months due to the lockdown.

The retail vacancy rate hit a record high in 2021, but peaked in the first half of the year at 15.8 per cent, with a 0.1 per cent decrease recorded in the second half. The LDC said this figure looks set to decline further as more units are taken off the market for repurposing and as retailers return to acquiring new sites.

The leisure sector has shown promising signs of recovery, despite restrictions on hospitality continuing well into 2021. The leisure vacancy rate dropped from 11.3 per cent to 11.0 per cent over the six months— the largest decrease since records began in the first half of 2013.

Shopping centres, which had previously seen the greatest increase in vacancy since the onset of the pandemic, saw a reduction in vacancy rate of 0.3 per cent, bringing the shopping centre vacancy figure back down to 19.1 per cent at the end of 2021.

Retail parks saw a 0.2 per cent decline in vacancy rate in the second half of 2021, continuing the trend of carrying the lowest vacancy rate of any location type since 2013.

The vacancy rate for high streets fell by 0.1 per cent in H2 2021. High street vacancy rates were only up 2.3 per cent on H2 2019, compared to increases of 3.2 per cent for retail parks and 4.8 per cent for shopping centres over the same period, suggesting that high streets were not as heavily impacted by Covid-19 as the other location types.

The LDC attributed this to less exposure to at-risk brands and having a higher percentage of independent occupiers who benefited from additional government support throughout the pandemic.

The market researcher noted that the vacancy rates are not expected to return to pre-pandemic levels yet, but they are projected to decline further over 2022 due to the continued redevelopment and repurposing of retail space.

Last year saw a record jump in redevelopment activity, an increase of 49 per cent, suggesting that the worst of the pandemic-related closures is over and the industry has shifted its focus from survival to recovery.

“Vacancy rates peaked halfway through 2021 as a result of this but, as we come into 2022, these latest statistics are cause for cautious optimism, with the number of empty shops finally coming down as consumers return to high streets and shopping centres,” Lucy Stainton, commercial director at Local Data Company, commented.

“Our analysis points towards this trend continuing as the final shakeout from various CVAs and insolvencies is hopefully behind us and independent operators continue to open new sites. With many chains re-looking at their strategy for growth, the independent sector proving buoyant and an unprecedented level of repurposing and redevelopment, we could be seeing the start of a new phase of physical retailing and we will be tracking this very closely.”