DTZ has today published the Retail Property Health Index (RPHI) which ranks 128 counties / local authorities according to their current and future economic, socio-demographic and retail characteristics. The RPHI utilises historic and forecast economic data for population, unemployment and consumer spending amongst others. In addition demographic data about the relative affluence of households is used. Retail characteristics include the volume and type of floorspace, vacancy rates and competitiveness defined as the proportion of available and attracted retail sales spending. This data is weighted and combined to construct the RPHI.
According to the RPHI the 5 most healthy retail locations are currently Surrey, Oxfordshire, Brighton & Hove, York and Inner London (West).
According to the RPHI the 5 most healthy retail locations in five years time will be Inner London (West), Surrey, Solihull, Outer London (West & North West) and Oxfordshire.
The RPHI identifies Berkshire, Cheshire, Worcestershire, Northamptonshire and Shropshire as retail ‘hotspots’ to watch. These ‘high potential’ areas currently have higher than average vacancy rates, but are forecast to experience above average economic growth which is expected to translate into relatively fast vacancy rate declines and subsequent retail property rental growth over the next five years.
Commenting on the findings Jonathan Rumsey, DTZ’s Associate Director for Retail Market Analysis, said: “The RPHI data excludes retail parks and therefore clearly shows how the improving economic outlook and rising consumer confidence is now being reflected in a revival of the high street. In-town and shopping centre vacancy rates are falling and while this has yet to translate into retail rental growth outside of London, we fully expect to see firmer rents as the economic recovery becomes more sustained across the UK.
“Retailer requirements are also changing. Increasingly they are favouring larger units which provide greater opportunities to display stock and retain shoppers for longer through leisure or experiential areas in prime locations. Retailers are increasingly utilising smaller format stores for click and collect.”
Richard Yorke, Head of UK research at DTZ, said: “The effects of economic recovery on the retail property market is still presently concentrated in the South East which has seen growth in consumer spend and retails sales underpinning vibrant retail recovery. However this is changing. As the economic recovery broadens, the variance in forecast economic indicators between the regions is reducing, closing the gap between North and South.”