The South West has been identified as one of the UK’s retail success stories by leading commercial property specialist Colliers International.
The global real estate advisor tracks the progress of key retail locations throughout the UK, and this year the market update in the annual Midsummer Retail Report shows overall positive retail growth for the South West of 2.5% – the highest in England outside London and the South East.
Speaking at the launch of the report at the Showcase Cinema de Lux in Bristol’s Cabot Circus shopping centre, Nick Turk, Bristol-based retail director at Colliers International, said: “It appears that after a prolonged period of stabilisation, the South West is now moving forward with re-based rents, sustained occupier demand and relatively constrained supply.”
Bristol prime rents have increased by 6% over the past year, according to the report, while Exeter is now at its highest level since 2008. Some smaller markets have seen double-digit growth – in Christchurch prime rents are up 19%, and they have risen 13% in Falmouth.
The Colliers International Midsummer Retail Report gives authoritative perspectives across the UK shopping scene by looking at the trends and innovations which are shaping the country’s retail sector and its property market. The report monitors rents and empty shops across the country in 420 locations across the UK.
The title of this year’s report is ‘Survival of the Fittest’, and it examines how retail and property have adapted to the seismic geopolitical changes of the past 12 months.
Mr Turk noted that the title was particularly apt with regard to the South West. “Average prime South West rents have increased by 2.5% – the strongest regional annual rental growth performance in England outside of London and the South East,” he said.
“A total of 39% of South West locations recorded rental increases, which is more than double the UK average.
“Yet the South West also exemplifies the polarisation of retail. While there has been an increase in rents, 11% of locations also saw a decline compared to no decline being noted in 2016.”
The areas that have seen increases in retail rents include Christchurch (up 19% to £47.50 per sq ft) and Falmouth (up 13% to £45 per sq ft), as well as the main retail hubs in Exeter (up 11% to £200 per sq ft, its highest level since 2008) and Bristol (up 6% to £170 per sq ft).
Mr Turk added: “Cheltenham is one of the region’s strongest retail centres with good affluence levels, a refurbished Regents Arcade, low vacancy rates and a new John Lewis due to open shortly. This is a testament both to the strength of the town as well as the spending power of the great and good of the Cotswolds.”
He continued that occupier demand remained highly selective, and this was reflected in the retail warehouse sector where planned new schemes are all competing for occupiers.
“As an example, Truro has strong retail demand and the Hendra Retail Park in Truro looks the most likely to be developed out with Aldi as a confirmed tenant. Other towns and cities in the South West have very little vacant accommodation on retail parks but equally it has been hard to move rents on,” he said.
“The barometer of demand over the last year has been the fate of the former BHS units. In Bristol, the unit in Broadmead is to be occupied by Metro Bank and potentially TK Maxx. Poundland has combined with gym operators to take the former department stores in Exeter and Taunton. Wilko has taken the Truro unit but the Torquay, Plymouth and Weston-super-Mare stores are still looking for occupiers.”
Mr Turk added: “The barometer of demand over the last year has been the fate of the former BHS units. In Bristol, the unit in Broadmead is to be occupied by Metro Bank and potentially TK Maxx. Poundland has combined with gym operators to take the former department stores in Exeter and Taunton. Wilko has taken the Truro unit but the Torquay, Plymouth and Weston-super-Mare stores are still looking for occupiers.”
He continued: “My gut says that the days of the department store are numbered except for the best, in the best locations. There will always be a place for the likes of Selfridges and John Lewis because of the locations they occupy and the quality of the fit out and products available.
“However, a large store with no specific USP will struggle in the Internet-based world that allows you to look at different brands and get the best price on your smartphone without leaving your favourite chair, clasping a cold beer of a gin and tonic! In essence, it is the fittest that survive, and BHS was out of shape long ago.”
