Shop rents down, survey finds

23 August, 2011

Shop rents are falling in real terms and landlords are taking an increasingly flexible approach, according to new data.

An Investment Property Databank study of nearly 48,000 retail tenancies found that although inflation has risen by 94% since 1989, rents for standard shops have only gone up by 34% - representing a 37% fall in real terms.

The study also found that 34% of new leases now have a break clause, compared to fewer than 4% in 1999.

Liz Peace, chief executive of the British Property Federation, said: “The issues facing our high streets are extremely complex with recession, structural changes caused by the internet and consumer preference all in play. In such times of change it is important that leases adapt.

“Today’s data clearly shows landlords are increasingly flexible and retail property leases continue to adjust to economic conditions, with leases that are shorter, offering breaks and substantial rent-free periods to help new shops to get off the ground.

“Whilst rents in prime retail areas and sites such as shopping centres will have increased substantially, many high street shops will have rents that in real terms are substantially lower than in 1989.”




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