Configured retail units in good locations continue to be in demand, according to Jones Lang LaSalle. Despite structural changes currently taking place in the sector and a constant stream of businesses going into administration, there are some success stories to emerge. However, it is only prime spots that are attracting the eyes of those considering investing in property.
Analysing the Christmas performance of several retailers, including Whistles, Phones 4 U and John Lewis, Tim Vallance, head of UK Retail at Jones Lang LaSalle, observed that the majority of companies experienced year-on-year growth, with the exceptions of Comet, Jessops and HMV. However, online shopping is taking over the sector, with footfall in high street stores diminishing. Mr Vallance claims that while units will become vacant when businesses fail, those that are well configured and located will easily be sold or re-let.
However, with the retail sector seemingly contracting, medium and low end property is struggling to attract buyers. "Polarisation continues on our retail landscape with the stronger locations getting stronger and the weaker gradually getting weaker," Mr Vallance said. "Physical retail will remain the dominant and preferred distribution channel overall, but currently a shake-up and redefinition of our UK retail hierarchy is well underway."
In order to adapt to changing environments, Jones Lang LaSalle claim the government, the retail sector and the property industry must act quickly. This will help the market achieve its predicted growth figures, with Capital Economics expecting retail rents to grow by 0.7 per cent, 1.2 per cent and 1.7 per cent in 2014, 2015 and 2016 respectively. According to their UK Commercial Property Analyst Q2 2012, increases over the next couple of years will be built on the back of improved economic environments, with the commercial property market finding a floor in 2013. Consumer spending is also expected to recover this year, helping to give the retail industry a much needed boost.
- Monday 21 January 2013