London sees demand for retail space decline

London has seen demand for retail space slide according to a survey by the Royal Institution of Chartered Surveyors (Rics), with demand reaching lows not seen since the financial crisis in 2008.

Once the wishlist of every brand to have a retail outlet in London, the UK highstreet is rife with vacancies and British conglomerates like Marks and Spencer are re-evaluating their retail spaces and closing stores in non profitable locations.

According to the report, results show the downturn across the retail sector intensifying, with stores in secondary locations displaying particularly negative rental and capital value projections. This remains in contrast with the performance of the industrial sector, which continues to attract solid demand from both occupiers and investors.

There are mixed views when it comes to defining the current stage of the property cycle, notes the report: 26 percent of surveyed respondents across the UK (ex London) say the market may be in the early stages of a downturn, up from 14 percent in Q1.

39 percent believe the market is still in some stage of the growth phase, down from 52 percent last quarter. In London, a clear majority of 71 percent of contributors believe the market is in a downturn (up from 52 percent previously).

Simon Wainwright from JPW Real Estate in London commented: "I’m seeing a continuing decline in retail, a stagnant office market and high investor interest in industrial chasing yield. Many occupiers are consolidating their space requirements as economic uncertainty prevails.”

Mr B. K. Bhalla of Acrewoods Chartered Surveyors commented: "Demand for good secondary retail increasing, whilst demand is falling for prime retail. Uncertainty about Brexit is having a downward effect on investor and occupier confidence.”

The full report can read at www.rics.org.

Photo credit:Vacancies, Tullamore March 2011, source: Wikimedia Commons