UK high streets see lower space demand, London suffers

By

Sandra Halliday

Published
Jul 19, 2018

As the UK retail sector remains one of the most pressured in the world due to Brexit uncertainties and fast migration online, demand for retail space is falling, a new survey showed on Thursday.

And the survey, published by the Royal Institution of Chartered Surveyors (Rics), found that even the relatively buoyant London retail sector is suffering, despite the general view that London can weather the storm better than some other regions.

Around 68% more chartered surveyors in London's retail sector have seen a quarterly fall in demand for space in the capital, a level not seen since the heights of the global financial crisis in 2008.

But at the same time as demand fell, availability of retail space rose sharply, with 46% more respondents seeing an increase rather than decrease in vacancies.

That’s no surprise given the large number of CVAs this year as well as company failures and other big names announcing store closure programmes.

New Look, House of Fraser, M&S, Toys R Us, Maplin, Mothercare, East and many more have contributed to the increased space availability, while developers have played their part as they’ve continued to add new space in locations with higher footfall.

It's interesting that over a third of respondents UK-wide noted seeing more CVAs in the past year and as many as two thirds expect to see so-called CVA clauses being inserted into retail space contracts in the future.

Fashion giant Next has already signalled that it will be seeking such terms in future if retailers in close proximity to it manage to achieve lower rental costs or to exit leases altogether due to CVA plans.