UK retail rental market continues to grow - commercial mortgages

11 October 2006

Retail rents in the UK continued to grow during the 12 months to May this year, according to a new report by property specialist Colliers CRE.

The company's survey found that five of the 12 UK regions experiences growth above the national average, while London retail property demonstrated rental growth of 4.5 per cent with six of country's the 20 highest performing areas found in the capital.

However, compared to the same period last year, rental growth has slowed down from 4.1 per cent to 3.4 per cent which the firm attributes to new economic pressures facing investors, including those with commercial mortgages.

"With this backdrop, there is little wonder that the market for letting shops is challenging, particularly in new schemes which rely upon significant uplifts in rent from that previously achieved in the town," Colliers CRE says.

"Despite the challenges faced by retailers, expansion continues and rental levels within the new developments appear to be holding steady."

Even small market towns, such as Whitby and Dewsbury in Yorkshire had shown significant rental growth of an estimated 40 per cent, the Yorkshire Evening Post reports.

Tom Cullen, associate director of retail at Colliers CRE's office in Leeds told the newspaper that these areas are able to attract "national fashion operators" to boost rents.