More shops lie empty as high street feels the cuts

More than one in seven retail stores across the UK are empty and in some small towns the number of boarded-up shops is nearly as high as two in five. Worse still, a "growing" North-South divide is set to increase the overall vacancy rate to more than one in six shops over the next 18 months, as the Government's austerity measures take their toll.

Matthew Hopkinson, a director of the Local Data Company, which compield the figures, said: "The sad reality is that the number of vacant shops are increasing, with certain areas of the country severely impacted and unlikely to recover."

The retail data research firm found that town-centre vacancy rates surged to 14.5 per cent last year from 12 per cent in 2009. In the 794 towns surveyed, this latest figure equates to more than 26,000 empty units. The findings may focus minds of retail landlords who are considering blocking a second big property disposal programme by the troubled retailer JJB Sports inside two years. It wants to offload up to 95 stores through a company voluntary arrangement insolvency to safeguard its future.

The Centre for Retail Research expects about 10,000 shops to close in 2011, as retailers reduce the size of their portfolios in the wake of economic pressure. HMV, for instance, said last month that bit planned to close 40 of its entertainment shops and 20 of its Waterstone's book stores in January.

In terms of vacant shops, Local Data Company found evidence of a North-South divide which it described as "large and growing". This will be exacerbated by public-sector job cuts but the impact may be delayed, as retailers get a short-term boost from workers spending generous redundancy payments, Mr Hopkinson said.

In 2010, 90 per cent of the top 25 highest-vacancy large towns were in the Midlands or the North. Among large towns, Rotherham has the most vacant stores at 28.2 per cent. Across the UK, Margate has the highest rate of 37.4 per cent. Big shopping centres in London and the South-east are "holding up well", the Local Data Company found. Of the top 20 big retail centres ranked by vacancy, Watford is the only large south-eastern centre, in 19th position.

Mr Hopkinson said he expected the overall vacancy rate to "level out" to between 14 per cent and 18 per cent over the next 18 months. Industry experts have also pointed out that the growth of online shopping – which now accounts for about 10 per cent of total retail sales – means that chains require fewer stores. David Harper, the co-founder at Harper Dennis Hobbs, the retail property firm, said: "The internet has meant that in the past a retailer might have needed 250 shops to cover the UK population but nowadays there is a view that you only need about 50 stores in the so-called mega [shopping] centres to do the same job."

The British Property Federation said the soaring vacancy rates raised "serious questions" about the Government's decision to increase its tax on empty shops from April. Hitherto properties with a rateable value of less than £18,000 a year had been exempt from local property taxes on empty shops, but from 1 April this will drop to £2,600.

Despite this gloom, the big grocers are opening new stores at a rapid rate and will create 32,000 jobs this year. Jason Sibthorpe, the head of retail at GVA, the property firm, said: "All the big supermarkets have become far more adaptable in terms of how they approach representation for their various formats, such as convenience and superstores, into prime space that becomes available."