Average retail rents in UK set to stabilise soon: C&W

Average retail property rents declined just over 8% in 2009, says Cushman & Wakefield in its latest quarterly update on the UK market. The property adviser notes that although rents declined by a further 1% in the final quarter of 2009, the rate of softening has begun to ease and the market should return to stability in 2010.

Most of the UK’s major cities saw rental falls in Q4, although London has bucked the trend throughout the economic downturn and rents have increased to new highs on Bond Street where a 9.7% rise was recorded. While London’s office markets have borne the brunt of the financial crisis, the capital’s retail market has benefited from a continued influx of newcomers chasing a limited supply of good quality space. A weak sterling has also boosted London’s appeal to European tourists who have continued to spend in the capital’s shops.

Occupier activity increased towards the year-end, although availability remains at just over 10% - down from around 12% in October. However, this may be distorted by the number of short-term/temporary lettings normally seen in the run up to Christmas.

Darren Yates, associate in Cushman & Wakefield’s European research group, said: 'Select parts of the UK retail market such as London continue to outperform and, encouragingly, there are signs in some areas where demand is beginning to exceed supply. Whilst a strong demand-led recovery is not on the cards for the immediate future, the retail sector is at least more stable than 12 months ago.'

The picture was gloomier elsewhere in the UK with prime rents dropping 25% in Cardiff and 19.1% in Edinburgh for example. Birmingham was fairly typical of a number of locations in the West Midlands recording a 14.1% fall.