394,000 square metres of retail floor space has been lost over the last year in England and Wales*, the equivalent of 55 football pitches, shows a study by Boodle Hatfield, the leading private wealth and property law firm.

The study looks at floor space that has been permanently taken out of retail use rather than retail space that is currently vacant.

Reading has lost the largest amount of retail space of any town in the UK, losing 4.2%, or 20,000 m², of its retail floor space over the past year.

Nuneaton and Bedworth in the Midlands (7.6% or 17,000 m²) and Kensington and Chelsea (2.1% or 14,000 m²) saw the second and third biggest losses of retail space, in terms of square metres (see graph below). Recent research has also shown that over 1,200 shops have shut on Britain’s top 500 high streets in the first half of 2019.

The shift in consumer spending to online has accelerated the loss of retail space in the last year as more landlords decide to change the usage of vacant retail space rather than continue to try and rent that space out to retailers. This slowdown in consumer spending combined with the increases in business rates have reduced the appetite of successful retailers to pick up the space that has become available through retailer insolvencies.

Simon Williams, Partner and Head of Property at Boodle Hatfield: “Retailers are continuing to cut unprofitable space and dedicate more effort to their online sales.”

“Most of the retail space that is actually being closed for good is in secondary and tertiary locations outside of the town and city centres.”

“Many of the successful shops on the high street are those implementing ‘retail theatre’, which aims to mix leisure and retail to create better shopping experiences.”

Boodle Hatfield explains, however, that the overall retail floor space (including space that is yet to be let) is still growing in some major cities. In London there has been an increase of 31,000 m², whilst Liverpool and Birmingham have seen rises of 25,000 m² and 18,000 m² respectively.

Boodle Hatfield says that the more successful retail areas are those that are increasingly being adapted to provide ‘experiences’, as consumers use the high street or shopping centre for leisure. This “retail as theatre” approach was pioneered by Nike, which launched Niketown in London in 1999 – more brands such as adidas, Apple and now Microsoft have followed suit.

Simon Williams adds: “City and town centres can still generate increasing footfall. Shops on major high streets aren’t going to disappear – what is changing is how much effort landlords now need to put in in order to curate a range of retail brands.”

Boodle Hatfield explains that retail landlords are increasingly 'placemaking' with their tenants. This refers to the idea of creating a sense of place and giving more reasons for consumers to visit their locations, other than simply shopping for day-to-day products.

Simon Williams continues: “There is now more buy-in from landlords who are taking far more of an interest in developing the areas in which their properties are located.”

“They are no longer focused solely on maximising short term rental income. They are willing to take lower rents from some tenants if they think that those tenant will contribute to making the location a ‘go-to’ destination for shoppers. Doing this can attract a more diverse customer base.”

“Some landlords are looking to take an even broader approach to how they use retail space. By looking beyond traditional retail and leisure businesses, landlords could choose to fill empty premises with tenants that can contribute culturally to the area even if they don’t pay as much rent - for example galleries, non-profits and cultural organisations. This could improve a location’s long-term value.”

Top 20 areas that have seen the biggest reductions in retail floorspace in the last year

* Total loss of retail floorspace by all areas that have seen a reduction in retail floorspace. Year end March 31 2019. Source: Valuation Office Agency, Business Floorspace, England & Wales

** Local Data Company and PWC

This research has been quoted in articles in the Independent, Retail Gazette, Property Week and Mail Online.