Demand for London retail space slumps as high street woes deepen | City A.M.
Demand for retail space in London has dived as woes around high street closures grow, according to a highly-regarded survey out today.
Roughly 68 per cent more chartered surveyors in London’s retail sector noted a quarterly fall, rather than a rise, in demand for space in the capital, reaching levels not seen since 2008.
The report, published by the Royal Institution of Chartered Surveyors (Rics), also found that availability of retail space rose sharply over the quarter, with 46 per cent more respondents noting an increase rather than decrease in vacant plots.
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The findings are fresh evidence of a high street slump that has hit major retailers such as Marks & Spencer and Poundworld, which have both announced a wave of store closures after entering an insolvency process known as a Company Voluntary Arrangement (CVA).
Just over one-third of respondents across the UK reported seeing an increase in the usage of CVAs over the past year, with around two-thirds anticipating that this will lead to more retailers inserting CVA clauses into contracts going forward.
Seven in 10 respondents sensed that investors will be looking to scale back exposure to the sector.
Simon Rubinsohn, RICS chief economist, said: “The challenges being faced by retail not surprisingly come through strongly in the latest set of results, but the counterpoint to this is the ongoing strength of demand for good quality, well located industrial/logistic sites. Indeed, the lack of availability of stock in the industrial segment of the market and the generally sluggish development pipeline, is pointing towards further healthy gains in pricing.”
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Barry Bhalla of London-based Acrewoods Chartered Surveyors said: “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.”