Figures from Colliers International’s 2014 Midsummer Retail Report present an improving picture for Yorkshire and Humberside’s retail sector; after five years of decline, rental growth has stabilised.
The region experienced flat rental growth in 2014, outperforming the national average (excluding London) of -1.2 per cent, making it one of only four regions in the UK to avoid another period of decline.
Yorkshire and Humberside’s 2014 retail rental growth figures indicate a positive outlook after the prolonged downtown.
The region’s 2014 rental growth surpassed the national average; however, the average rent remains 19 per cent below pre-recession levels, of £155 in 2008, recording a regional average of £125 per sq in 2014.
Greg Styles, head of Retail Development and Leeds Office, Colliers International said:
“Yorkshire and Humberside’s retail sector is showing signs of recovery, the outlook for the coming years is one of positivity.
“It’s a very different story in other parts of the UK, however, and many towns and cities across the UK are continuing to struggle where schemes and developments remain on hold or have been shelved indefinitely.
“Thankfully, over the past 12 months, Yorkshire and Humberside has benefited from a number of newly opened or pre-let shopping centres.
“The region is already performing better than the UK average (excluding London), and with the amount of development being undertaken in centres, such as Leeds, we expect the region to move up the national rental growth rankings in the coming years.”
The decline in the number of centres with falling rents, from 33 per cent in 2013 to 14 per cent in 2014, has been the main factor behind the improving picture in Yorkshire and Humberside’s retail environment.
The report identified Leeds as the worst performing centre in the region with a rental decline of nine per cent, almost eight per cent worse than the UK average.
Since 2010, in stark contrast to the rest of the UK which experienced deepening decline, Leeds witnessed four consecutive years of flat or positive rental growth.
“The 2014 picture for Leeds is owing to the launch of Trinity, with the addition of Hammerson’s Victoria Gate in autumn 2016 these new developments will boast 1.4 million sq ft of retail space, they are the main drivers behind a decline in prime rents for the first time since 2009.
“Many were concerned that there wasn’t enough demand in the market to fill all the additional retail space generated by these schemes, and that this would therefore lead to vacancies on the high street.
However, we don’t believe this to be the case, Trinity is 98 per cent let and has generated a footfall of over 20 million it its first 12 months.
Over the coming months, as the market absorbs the remaining units, we expect positive rental growth to return and these new developments will further strengthen Leeds’ position as a shopping destination.”
The best performing centres include Kingston upon Hull, which experienced 23 per cent rental growth, an increase of £25 per sq ft, to £135 per sq ft; followed by Harrogate at 20 per cent, also increasing by £25 per sq ft, to £150 per sq ft; and Keighley at 11 per cent, a rise of £5 per sq ft, to £45 per sq ft.
More than two thirds (67 per cent) of centres benefited from stable rents, this figure is up ten per cent since 2013, while 19 per cent of centres’ rents increased in 2014 versus just ten per cent last year.
Mr Styles said:
“The rental data indicates flat growth, but this regional average doesn’t portray the reality in many towns and cities in Yorkshire and Humberside.
“Rents in affluent market towns, where demand is high and supply low, are going up; this is also true for a number of cities in the region, including York, Leeds and now Bradford, due to the recent Westfield scheme.
“The success of these centres is testament to the strength of the region as a whole.”