Pictured: Alistair Winning

The top 20 malls and high streets in the UK are experiencing their best vacancy rates position for 10 years, according to figures released by DTZ Retail. Vacancy rates across these malls and high streets are now on average 15% lower at 2.55% than 12 months ago, when they stood at 3%. 

Hugh Radford, Head of UK Retail at DTZ said: "These figures may well come as a surprise to many commentators given the ongoing tough retail trading environment and uncertain global economic outlook. These figures do, however, only apply to the top 20 malls and high streets in the UK, which are rare, super prime locations. These include Buchanan St, Glasgow, the Bullring, Birmingham, the Trafford Centre, Manchester, Briggate in Leeds, and a number of dominant malls around London, including Brent Cross, Bluewater and Westfield London."

The figures from DTZ Retail show that London in particular, buoyed by tourist spending and the resilience of consumers, continues to perform well despite the global economic recession. Vacancy in Oxford Street, Bond Street, Regent Street and Westfield London is effectively at zero per cent. Bluewater in Kent has also created 27 lettings in the last 12 months.

Some of the regional cities are holding up very well where demand for well-configured, prime shops has not dropped away. International retailers and the expansion of successful UK retailers, such as Republic and Superdry, have helped to drive this position.

One of the reasons for the low vacancy rates in super prime locations is the growing trend for international retailers to focus on these locations. Hugh Radford comments: "International retailers currently acquiring space in the UK, such as Forever 21, Hollister and Victoria's Secret, are focusing on the top 10 or 20 locations before moving on to Continental Europe and Asia. Previously you could expect these retailers to choose between the top 25 or 30 locations but their focus has narrowed; a trend that we have long predicted. Consumers want to shop in fewer locations and be offered a full and broad range of products, rather than being offered a smaller range in more locations. We don't see the number of locations that international retailers are targeting increasing in the medium term."

Alistair Winning, Surveyor in DTZ's Retail Management team in Birmingham comments on the regional outlook: "The picture away from London and the super prime locations has been varied, particularly in the West Midlands. Whilst schemes such as the Bullring, Birmingham and Touchwood in Solihull are effectively fully let, other secondary locations have struggled. Figures released by the Local Data Company earlier this month revealed that Dudley (29.4%) and West Bromwich (28.3%) occupy the top two spots for town centre vacancy rates. With the end of the third quarter just around the corner, we may see further movement in these figures."

According to DTZ Retail, the development pipeline is at its driest for 15 years and there is little opportunity for retailers to improve their portfolio in new prime malls. This desire to secure good quality space by retailers in super prime is being borne out by the seven or eight figure premiums being paid in Central London for key brands to secure their flagship stores. 

Hugh Radford added: "The picture in secondary is very different, with some locations faring well but many others appear to have gone beyond the point of no return and will need to shrink to adapt to reduced current and future demand. This will require other uses, including offices and residential, to take the place of shops. As secondary makes up over 90% of the retail market, it is very difficult to generalise. A key success factor for secondary malls and high streets is whether landlords have money to invest to retain, or replace, retailers using incentives and where required, refurbish and upgrade units. 

"The challenge for landlords is set to intensify. Over the next few years we will see a 'perfect storm' of lease expiries across the UK, as 25 year, 15 year and 10 year leases all start to expire. Owners will need capital to ensure a continuation of current income or to manage it down as leases fall in." 

DTZ is leasing agent for Westfield Stratford City, Westfield London and Bluewater which are three of the UK's super prime malls.