High street chains could benefit from slump in commercial property demand
Monday 21 July 2008
The high street chains taking on their landlords' rental policies could benefit from sharply falling demand for commercial prop-erty, particularly in the retail sector.
Sixteen big name retailers are joining together to put pressure on their landlords to accept rent on a monthly basis, rather than in advance every quarter, to ease the impact of slowing consumer spending. Campaigners include Carphone Warehouse, BHS and Boots, and targets include both property companies and pension funds. "Everything else is getting squeezed," one major retailer told The Independent. "In the light of all that is going on, it is time for the landlords to come to the party."
But commercial landlords are already feeling the pinch, the latest survey from the Royal Institute of Chartered Surveyors (Rics) will say today.
The balance of surveyors rep-orting a fall rather than a rise in demand was -50 per cent during the three months to the end of June, down from -32 per cent in the previous quarter and +12 per cent in the same per-iod last year.
Although falls were recorded across all three main comm-ercial property sectors – ind-ustrial, retail and offices – it was the high street that saw the biggest drop. The balance of surveyors reporting demand for retail space fell as low as -80 per cent in the west of England, and -89 per cent in the north-west.
Notably for the retailers' rental campaign, Rics says that the increasing bargaining power of business tenants has sent the value of inducements rising at the fastest rate since the survey began. Meanwhile, average lease lengths are shortening, with the steepest declines taking place in the retail sector.
But there is also a rare ray of light from the beleaguered high street today. The British Retail Consortium's figures for June show central London sales up 8.7 per cent, year on year – the fastest growth since February – although nationally sales were down 0.4 per cent.
The capital's West End also saw footfall up 6.6 per cent year on year, against a national average of a 1 per cent decline, according to the New West End Company.
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