Corporate restructuring advisor Duff and Phelps has revealed that close to 16% of all UK retail and shop outlets remain empty, according to a Freedom of Information (FOI) request made to local councils.
Its research found that over 50,000 units in 418 councils remain closed, an average of 121 empty units per council.
There were 319,000 retail businesses in 2018 according to the ONS, with the advisors estimating the void rate is now at 15.9%. Business rates have been deemed to be a contributing factor for the increase in empty units, with rates being an estimated 2.3% of overall business costs for a traditional brick and mortar retailer, compared to just 0.6% for pure-play online retailers.
The retail market is one of the most important in the UK, with its economic output in 2017 estimated at £92.8bn, employing around 2.8 million people and comprising of 319,000 businesses.
Philip Duffy, managing director, restructuring advisory, Duff and Phelps, said: “The impact on local government cannot be underestimated either. FOI also identified that 91% of UK local authorities are retail landlords in their own right. Empty units mean lost rental and business rates income, all at a time when many local authorities are reporting increased financial pressures.
“The old financial model of the traditional brick and mortar retailer—based on a high street or shopping centre built around them in the post war era—was centred on regular increases in sales and 25-year leases with upward rent reviews only.”
He added: “As a result, it has meant high rents and occupancy costs. This has blown apart as a result of both the discounters and the dramatic uptick in online sales. The remaining question is whether this picture continues throughout 2019 and if so, at what speed?”