One man's view.....The demise of Retail? Thoughts from Robert Lane at PAI member firm, Lane Walker.
Having started my life as a surveyor in the 1970’s with a major London based retail specialist I have found the virtual collapse of retail values in a number of towns and cities in the last few years hard to understand.
Yes, the rise of internet shopping and the growth of online giants such as Amazon has had an impact, but recent figures suggest that online sales have peaked at around 20% of the market. We also have a mixed economic forecast and the uncertainty caused by Brexit. I do feel, however, that a major contributory factor has been the over provision of in town and more importantly out of town retail space.
Recent visits with PAI to Newcastle and Liverpool have to a certain extent restored my faith in the retail market. Both cities have a strong retail centre anchored by major shopping centres, Eldon Square and Liverpool One and importantly both have a thriving leisure scene adjacent to the prime shopping to make them both 24-hour cities. With a very low vacancy rate this helps maintain rental and capital values.
Smaller or less fashionable towns and cities have suffered substantial vacancy levels as a result of major multiples downsizing and too much retail space and tenants have used this to negotiate lower rentals and shorter leases. As discussed at the recent PAI Investment Panel meeting this ‘re-basing’ has resulted in Capital Values halving in some cases.
Rotherham, a town with Meadowhall Shopping Centre and Parkgate Shopping Park both a short distance from its retail heart has with Local Authority help created many new retail businesses by a combination of financial and advisory assistance which has started to increase the footfall in the town centre.
A combination of creating new retail businesses and developing the leisure offer is, in my opinion, the best way to fill vacant space and to encourage more use of town centres which in turn increases opportunities for investment. Perhaps the demise of the retail market has been exaggerated!