Empty shop space at seven-year high

Last year's slump in consumer spending has left property companies nursing the largest rise in vacant retail floorspace for at least seven years, a survey released today reveals.

The Royal Institute of Chartered Surveyors (Rics) said the balance of its members reporting a rise in available space jumped to its highest level since the survey began in 1999.

Rics said the figures suggested smaller retail operators were going to the wall amid fierce competition for increasingly price-conscious shoppers.

"Shaky employment prospects have had an impact on consumer spending, as have rising oil prices," it said. "We predict demand for rental space will remain subdued as household budgets are reined in."

The largest rise in available space was in central London, where the number of agents reporting a rise outnumbered those seeing a fall by 60 per cent.

New inquiries from potential occupiers and actual take-up of property both fell, while the value of inducements to tenants to sign a lease increased. Last year saw household spending grow by just 1.7 per cent, the lowest for a decade, while retail experts said it was the worst year for retailers on record. The first quarter of 2006 saw retail sales volumes suffer a 0.7 per cent fall, mainly due to woeful January sales, although recent indicators have pointed to a rebound in April.

Earlier this year, the head of the CBI's retail survey panel, John Longworth, warned that this year would be as "challenging" as 2005 had been. The executive director of Asda said: "Prices are rising and people only have a certain amount of cash to spend and that's why retailers will have to start closing stores."