THE number of vacant shop premises across Yorkshire is set to fall this year, claims a report.
Property agency King Sturge said retail vacancy rates were set to fall from a 20% high in prime shopping centres – and could be as low as 10% or 12% by the end of this year.
It said a shortage of new space and continuing flexible leases were helping to encourage occupiers.
But the report warned that vacancy rates will remain higher in some centres – such as Barnsley and Wakefield – as the recession continues to expose towns that are failing to implement effective regeneration policies.
Jonathan Newns, head of King Sturge’s in-town retail team, said: “The key shake-out among retailers happened a year ago as the start of the recession weeded out weaker players and those exposed to onerous finance structures.
“As a result, we will see retail vacancy rates fall as retailers take advantage of flexible and incentivised leases where they remain available.
“Even so, the tough times are far from over. A number of players remain vulnerable and further casualties are expected in the fashion and furniture sectors.”
Retail property values are also expected to start to recover by the end of the year.
Newns said: “2010 will still be a tenants’ market. Underlying rents are forecast to decline by 3.1% this year and 1.3% in 2011.
“While headline rents in Yorkshire and Humber have generally fallen by 20% in prime areas, some of the more secondary locations have seen as much as 50% reductions.
“We predict that this decline will slow dramatically in 2010, rental values will bottom out and probably improve slightly towards the end of the year as landlords refuse to increase incentives to occupiers as the economy improves.”
Despite the recession, about 3m sq ft of new shopping centre space opened in Yorkshire last year.
But Mr Newns said: “The pipeline will slow to a trickle during the next two years in the wake of financing issues and perceived occupier weakness.
“However, the next wave of development is already being lined up for 2012/13, when market conditions will have improved.
“Meanwhile, supermarkets will continue to provide some salvation for the retail sector.
“In spite of lower price inflation, they remain highly expansive, and will continue to absorb some of the over-supply in bulky goods retail warehousing and fall-out from the high street, as well as increasingly offering ‘anchor’ options for new developments.
“Food stores are also the only commercial property sub-sector to see rental growth throughout the recession and this is good news for Yorkshire with two of the big names – Asda and Morrisons – being based here.”