Retail property demand is at four-year low in UK

By

Barbara Santamaria

Published
Jan 25, 2018

Occupier demand for retail space fell for the third consecutive quarter at the end of 2017, with 22% more industry insiders reporting a fall in demand from prospective tenants.

This is the lowest level since 2011, according to the latest property market survey from RICS. The forecast for the next year is just as gloomy, with demand for shops  expected to decline in the near term and over next 12 months.

Properties in secondary retail locations are experiencing weakness and driving the decline, while rent projections for prime retail space were downgraded from a slightly positive outlook to flat in the fourth quarter.

The retail sector was the only area of the market to see an increase in the availability of leasable space during the quarter, said the report.

“The weakish tone to the Q4 survey results for the retail sector sits comfortably alongside the generally disappointing trading statements emanating from the high street in the run-up to Christmas. The counterpart to this is the ongoing strength in demand for well-located warehouses to support the inexorable rise of the online consumer,” commented Simon Rubinsohn, chief economis at RICS.

Indeed, occupier demand for warehouses increased by 24% during the period, according to the survey. The near-term rental growth in that sector remains very positive with 33% more respondents expecting a rise in rents.

When broken down by region, rental growth is predicted to be positive across most areas, except for London. While secondary space is likely to see a decline, rents in prime areas should prove more resilient, said RICS.