North/South divide clearer than ever with the South having one in 10 shops lying empty while the North has one in five

A report on vacancy rates entitled ‘Mind the Gap’, that analyses over 3,000 town centres, shopping centres and retail parks, shows the North/South divide clearer than ever with the South having one in 10 shops lying empty while the North has one in five.

The Local Data Company (LDC) report analyses retail and leisure vacancy rates in the second half of 2014 to deliver a comprehensive insight on the health of Britain’s towns, retail parks and shopping centres.

Shop (retail) vacancy rates have shown marked improvement towards the end of the year from their peak of 14.6% in February 2012 to 13.3% in the second half of 2014. The annual change has been an improvement of -0.7% (see fig 1).

Whilst the national picture is one of improvement this masks significant national and regional differences. For the first time since 2008 the worst English region is no longer the North West but is now the North East with a shop vacancy rate of 18.8% (-0.3% on H2 2013). The North East, North West, and West Midlands all have shop vacancy rates double that of London with Yorkshire and the Humber not far behind. On average one in 10 shops lie empty in the south whilst in the north the figure is double at one in five.

In light of the increasing importance of leisure uses (food, beverage and entertainment uses) LDC has been tracking vacant premises (retail and leisure) since January 2013 as this provides a more accurate picture of modern occupancy profiles.

The overall vacancy rate (retail and leisure uses) improved from 12.3% at the end of 2013 to 11.8% at the end of 2014 (-0.5%).

The North/South divide amongst the English Regions is still clear with southern centres being on average 5% better than northern centres.

Change over the last 12 months is varied with the North West surprisingly showing the greatest improvement at -1.0% (16.3%) and the West Midlands and Yorkshire and the Humber competing for the greatest decline at +0.3% each.

The North West, for the first time, has been replaced by the North East as the highest vacancy region at 16.8%. Outside of the London bubble at 7.8% are the South West and South East, both below 11% with the East of England just outside at 11.1% and the East Midlands standing at 13.5%. Thereafter all the three remaining regions (West Midlands, North West and North East) sit above 16%.

Of the top 10 worst town centres for vacant retail and leisure premises, all of whom are above 26%, five are in the West Midlands, four are in the North West with the North East having one. Conversely, of the top 10 best performing town centres with the least vacant units, six are in Greater London and the South East.

Vacancy by type of location provides an interesting comparison. Retail Parks show the lowest overall vacancy, followed by small towns. Large centres and Shopping Centres show the highest level of vacancy overall.

Matthew Hopkinson, director at the Local Data Company commented: “At a regional level the polarisation between the North and the South is as wide as ever with London’s vacancy rate being less than half that of the northern regions. Of the top 10 highest vacancy towns in the country all are in the North.

"Not only is the level of vacancy an issue, but of more significance in my view is the persistence of that vacancy. For example in the largest towns (400+shops) with the highest vacancy rate, 70% of those vacant units have remained empty for more than a year. Such analysis at town, shopping centre and retail park level gives the most realistic view about the over supply of retail and leisure premises up and down the country. Analysis by LDC at the end of 2014 showed that of all the vacant units tracked 20% of these had been vacant for more than three years. LDC data identifies 49,538 vacant units across the country, which therefore implies that 9,908 are never going to be re-occupied. This is the equivalent of five Manchester’s lying empty!

"In April we see the start of the business rates revaluation, which will be based on rental values as at April 2015. One thing you can be sure of is that the market will change even more rapidly in 2015 than in 2014 with some places seeing rental increases and others continuing to fall. As such creating a relevant business rate for implementation in 2017 is a challenging, expensive but also a flawed task.

"One thing that is very transparent is how vacancy rates and occupancy profiles are changing location by location and this ultimately mirrors where and why businesses succeed or fail.

"The granularity of LDC data shows these changes from a shop all the way up to the nation and what is clear is that polarisation is alive and well, and growing. With one in four shops lying empty in the north and just one on ten lying empty in the South the evidence is clear to see.”