Signs of post-Covid normalisation in retail and leisure activity

According to research data released by the Local Data Company (LDC), Britain’s retail and leisure sector is beginning to stabilise, suggesting that the worst of the pandemic impact is over. Their figures show that as vacancy rates rose slightly in the first half of 2021, in the second half this trend was reversed, most noticeably in the leisure sector.

The second half of 2021 saw the first vacancy rates in retail and leisure decline for the first time since the first half of 2018, a sure sign says LDC that the market is stabilising. Over the full year 2021, however, national vacancy rates increased by 0.7%, though this figure is still lower than expected given the lack of activity in the first 3 months, due to the lockdown – see the chart below.

The retail vacancy rate hit a record high in 2021, but peaking in the first half of the year at 15.8%, coming down again in the second half, with a 0.1% decrease. The retail vacancy rate currently sits at 15.7%, a figure that now looks set to decline further as more retail and leisure units are taken off the market, converting to other uses. Businesses are also returning to acquiring new sites.

The leisure sector is showing the most promise, with definite signs of recovery, despite restrictions on hospitality continuing well into 2021. The leisure vacancy rate figure has dropped from 11.3% to 11.0% over 6 months— the largest decrease says LDC since its records began in the first half of 2013.

Expanding chains and independent food and beverage operators are assisting growth, while increasing freedom from Covid, pent up demand from the various lockdowns, national sports activity such as England’s run in the Euros, and the return of office workers later in the year have all contributed to boosting demand in hospitality venues.

Shopping centres, hit hard by the Covid lockdowns and online shopping, previously seeing the greatest increase in vacancies since the onset of the pandemic, saw a reduction in vacancy rates of 0.3%. It brought the shopping centre vacancy rate figure down to 19.1% at the end of 2021.

Out of town and edge of town retail parks are continuing their trend of carrying the lowest vacancy rates of any retail / leisure location type since 2013, seeing a 0.2% decline in vacancy rates in the second half of 2021.

Britain’s High streets continued to prove more stable than other location types. The vacancy rate for high streets fell by 0.1% in the second half of 2021. However, high street vacancy rates were only up 2.3% on H2 2019, compared to increases of 3.2% for retail parks and 4.8% for shopping centres over the same period.

These figures suggest that high streets were not as heavily impacted by Covid as the other location types due to being less exposed to “at-risk” brands and having a higher percentage of independent occupiers who benefited from additional government support throughout the pandemic.

Vacancy rates are not expected to return to pre-pandemic levels yet though, but they are projected to continue to decline further over 2022, due to the continuing redevelopment and repurposing of retail space.

The year 2021 saw a record increase in the amount re-purposing and redevelopment activity, with an increase of 49%, suggesting that the worst of the pandemic-related closures is over and the industry has shifted its focus from survival to recovery, says LDC.

Lucy Stainton, Commercial Director, Local Data Company says:

“This latest analysis is significant because the figures finally point to a reversal of the structural decline we had seen accelerate with the onset of the COVID-19 pandemic. Going into this, the physical retail market had already been plagued by a number of other headwinds such as online and digital adoption, but the coronavirus brought about long periods of restricted trading and this proved insurmountable for many chains across both retail and hospitality.

“Vacancy rates peaked halfway through 2021 as a result of this but, as we come into 2022, these latest statistics are cause for cautious optimism, with the number of empty shops finally coming down as consumers return to high streets and shopping centres.

“Our analysis points towards this trend continuing as the final shakeout from various CVAs and insolvencies is hopefully behind us and independent operators continue to open new sites. With many chains re-looking at their strategy for growth, the independent sector proving buoyant and an unprecedented level of repurposing and redevelopment, we could be seeing the start of a new phase of physical retailing and we will be tracking this very closely.”

Below – Historical vacancy rates by occupier type across GB, 2013-2021 (Source: Local Data Company)

Below – Redevelopment activity across GB, 2015 – 2021 (Source: Local Data Company)

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