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The UK retail vacancy rate remained at 13.8% in the first quarter of 2023

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The UK retail vacancy rate ended five quarters of post-Covid improvement in the first three months of 2023, remaining at 13.8% amid widespread caution in the retail sector.

According to data from the British Retail Consortium and LDC, the first quarter vacancy rate of 13.8% was the same as that recorded in the fourth quarter and 0.3 percentage points better than the first quarter of 2022.

The vacancy rate peaked in the second quarter of 2021 during Covid lockdowns, at 14.4%.

Shopping Centre vacancies improved to 17.8%, down from 18.2% in Q4 2022.

High Street vacancies remained at 13.8% in Q1, the same level as Q4.

Retail Park vacancies improved to 8.7% in Q1, a 0.3 percentage point reduction from Q4 2023.

Geographically, Greater London, Southeast and East of England had the lowest vacancy rates. The highest rates were in the Northeast, followed by Wales and the West Midlands.

BRC CEO Helen Dickinson commented: “The vacancy rate in the first quarter of 2023 saw no improvement as cost pressures made many retailers think twice about investing in new stores. Despite shopping centres holding the highest proportion of empty units compared to other locations, it saw the largest quarterly occupancy increase thanks to the success of outlets as well as recent efforts to repurpose empty units, especially in the Northeast.

“With stubbornly high inflation and huge cost pressures facing business, retailers will continue to be cautious about future investments. Any regulatory burdens from Government will only force retailers to make difficult decisions about whether they can open new stores, or if they must close existing ones. By keeping oncoming regulation to a minimum, Government will help to support upholding and growing vibrant communities across the country.”

Lucy Stainton, commercial director, Local Data Company, said: “The stabilisation of vacancy rates across GB is partially indicative of operators, in the main, having a better than expected Christmas but coming into Q1 still cautious and biding their time to see how various macro-economic factors play out into 2023. This slowdown in activity along with the balance between pockets of growth versus sustained cost pressures has meant the first part of 2023 has seen comparatively slower structural change.

“That being said, whilst there has been a slowdown in the growth of independent businesses, we are seeing a number of chains return to focus on acquisitions and we predict that activity levels should ramp up between now and the end of the year, as the challenges operators face begin to ease up, with operators adapting their portfolios to meet current consumer demands, within this economic climate.

“It’s encouraging to see vacancy coming down across GB shopping centres, which were badly challenged during the covid pandemic, more so than any other location type. Again this speaks to a cautious return to growth for many chains, as well as more diversity within these schemes, as businesses who have traditionally been more high street focussed such as independents, turn their attention to shopping centre assets.”

Morning update

On the markets this morning, the FTSE 100 has dipped a further 0.1% to 7,823pts.

Early risers include Bakkavor, up 4.6% to 100p, Hotel Chocolat, back up 3.4% to 165.5p and Deliveroo, up 1.8% to 109.9p.

Fallers include Virgin Wines, down 2.3% to 38.1p, Ocado, down 2.2% to 501.4p and McBride, down 1.4% to 31.3p.

Yesterday in the City

The FTSE 100 fell for its third consecutive day, losing 0.5% to 7,852.6pts.

Sainsbury’s ended the day 3.5% to 274.1p despite beating market expectations on profits as it pledged to continue to invest in pricing to maintain market share.

Hotel Chocolat lost 8.6% to 160p after saying its performance will be below current market expectations after lower than expected Easter sales.

Other fallers included Nichols, down 4% to 1,095p, DS Smith, down 2.2% to 304.6p, , Marks & Spencer, down 1.7% to 163.9p, British American Tobacco, down 1.5% to 2,963p and PayPoint, down 1.4% to 437p.

The day’s risers included THG, up 6% to 96.8p, Deliveroo, up 2.9% to 108p, Just Eat, up 2.6% to 1,384p, SSP Group, up 1.9% to 255p and Domino’s Pizza Group, up 1.9% to 292.8p.