Independent Chartered Surveyors &
Commercial Property Agency

Regulated by RICS

The Changing Market for Retail Premises

Written by: Andrew Idle

13/03/2016 15:15

Recent press news quoting the British Retail Consortium (BRC) suggests that demand for traditional high street retail units is set to decline significantly over the next decade due to the impact of internet shopping and the national living wage policy.

To quote from the article produced courtesy of Costar;

“While the primary responsibility for managing all these impacts rests with the industry, the Government is also a key player and the report makes a number of recommendations to ensure the successful implementation of policy and to mitigate the impact of the changes expected in places and on people who may be most vulnerable.

The recommendations are:
Rebalance the burden of taxation, by fundamentally reforming the business rates system.

Ensure the remit of the Low Pay Commission is strengthened and clarified with regard to the National Living Wage.

Greater employer leadership of the apprenticeship levy including more discretion for employers over how and where it is spent.

It reports that since the May 2015 election there have been two major announcements – on the National Living Wage and the apprenticeship levy, plus the delay of announcements for the fundamental reform of business rates – that create a new overlay to the ‘ongoing structural change’.”

“The report reaches some positive conclusions. Customers will get better choice, better value, more convenience and more personalisation. Retailing will be more productive, powered by better jobs which offer the chance to develop a wide array of skills and greater earnings. Not because of the National Living Wage, but because differentiation between competing retailers will depend on it.”

Meanwhile, Andrew Idle Associates are finding that there is an increasing demand for retail premises from those operators, both independents and multiples, who are seeking temporary/pop-up shops initially. If the venture goes well, they will then consider a longer lease.

At the same time, Andrew Idle Associates will target growing national operators seeking attractive retail pitches on long leases where possible.

Whilst internet shopping has grown, it is not to everyone’s liking. Goods may be delivered in bulky packages and the order shipped may not be the right one, thereby necessitating returning it to the sender, and many still enjoy the experience of walking around and browsing the retail stores.

The quality of clothing merchandise, for example, is far easier to discern when it can be physically felt by hand, and it is good to have the reassurance of discussing any queries with a store assistant who has some knowledge of the products.

The BRC have been campaigning for some years now to reduce the burden of Business Rates on retailers. These are a major overhead without doubt, sometimes currently as high as the rental dependent upon location. There is an argument that the National Uniform Business Rate should be abolished and, instead, different rates in the £ applied dependent upon the economic strength of different towns and cities. No doubt this is one of the reasons why the Devolution movement is gathering strength.

In our City of Bradford, the Council are currently offering not only business rates reductions but also capital grants to retailers who invest in designated streets – the former café Premises at 3 Ivegate being marketed through Andrew Idle Associates is a good example of this. The pot of money which amounts to circa £150,000 per Premises is likely to be used up soon, so now is the time to pursue these Premises!

Andrew Idle