The latest Prime Rents and Yields Monitor from CBRE shows that prime Central London shops saw rents increase by 9.0% in the fourth quarter, which is the fastest growth in the sector since 1988.
Throughout the whole of 2015, rents in the capital’s central area saw a rise by 18%, with CBRE monitoring around a third of retail locations in Central London. Findings indicate the current demand for units in the area.
A more modest growth of 0.8% was found in the rest of the UK for prime retail rents in Q4, with estimated capital values of 1.4% which had little impact on yields that remain around 6%.
During the month of December and the frantic Christmas shopping season for UK retailers, footfall saw a decline by 3.9% and retail sales grew at 0.1% compared to December 2014. One of the reasons for this is due to consumer attitudes towards online shopping. Sales online grew by 15.1% during the period.
Head of UK Retail at CBRE, Phil Cann, commented: “The Christmas period has been a mixed bag for retailers, with retail sales rising slightly on December last year, despite a marked retreat in footfall from UK high streets. Nevertheless, Central London continues to boast some of the most sought-after retail spaces in the world, a fact brought to light by the quite remarkable jump in rents towards the end of 2015.
“Luxury retailers are chasing very limited available stock, sending rents soaring as they pay to place themselves at the heart of London’s luxury marketplace.”
Elsewhere, CBRE reported that both the office and industrial sectors saw reasonable growth in rents in Q4 also, with a 1.7% (6.5% in 2015) and 0.8% (6.8 in 2015) rise respectively.
UK commercial property rents grew by 1.3% and 0.5% over the year overall.
We recently looked into the current condition and future of high street retail.