The recent difficulties faced by the high street look set to continue for the foreseeable future as chartered surveyors predict further falls in rental values, according to RICS’ UK Commercial Market Survey for Q4 2012.
22% more respondents expect rents to continue to fall rather than rise over the coming months. This comes amidst the recent turmoil seen in the retail sector with high street giants HMV and Blockbuster entering administration.
The main driver behind this predicted drop is the steadily rising amount of unoccupied floor space and the ongoing fall in demand. During the last three months of the year, fewer businesses looked to rent retail premises (net balance -13) which resulted in a steady increase in empty premises across the country.
Across Great Britain, demand for retail space saw the most significant falls in the capital with London surveyors reporting the heftiest drops since mid-2009. Wales and the Midlands were the only parts of the country where interest from potential occupants failed to fall, with respondents in these areas reporting flat amounts of occupier interest.
RICS said the picture is somewhat less gloomy for office and industrial space with both seeing demand pick-up albeit from low levels. This is now feeding through into a flatter trend in rent expectations in these areas.
Simon Rubinsohn, RICS chief economist, said: “The end of 2012 was yet another incredibly tough period for the high street, brought to a head by the recent news of HMV, Blockbuster and Jessops who’ve dominated the headlines for all the wrong reasons. Sadly, this downbeat picture doesn’t look like changing any time soon with demand for retail space continuing to drop and more empty premises set to blight the country’s town centres.
“Significantly, though, last quarter did see demand for office space increase, along with industrial units. Although, only time will tell as to whether this is a genuine sign of recovery, it is encouraging that appetite is gradually growing in these areas as businesses look to expand.”