In order to combat rising vacancy rates, owners of commercial real estate are heavily pressured into offering significant discounts – often as high as 15 %, but sometimes even up to 50 %.
Fewer shops, lower rents
High streets have been hit hard by the winds of change: the gap between high-performing shopping areas and weak locations is growing, along with both the vacancy rate and paradoxically the total retail floor space. Inner city stores are suffering, while retail parks on thoroughfares continue to perform well.
In smaller cities in Belgium, stores belonging to major retail chains are disappearing: Hasselt saw the number of chain stores fall by 11 % in the past five years, in Turnhout that figure was 9 %, while Bruges saw a 7 % decrease. The consequences can be felt in rental prices, according to Belgian business newspaper De Tijd: real estate owners have to make considerable concessions, especially in smaller cities and in lower-profile locations. In some cases, rents have seen a reduction of as much as 50 %.
Retail parks stable
In the past year, rents for prime locations on the top high streets fell by an average of 7.5 %, Jones Lang LaSalle confirms. Rental prices in shopping centres even dropped by 10 %: rental prices only remained stable in retail parks”, the real estate specialist says.
The conclusion is that big-box stores and retail parks are managing to avoid being hit (for the time being). Although rents are historically lower there than in city centres and shopping centres, they remain stable. The vacancy rate is also less pronounced: 2 % of the premises at Retail Estates’ retail parks are vacant, compared to an average of 18 % in shopping centres.
