The most cost-effective locations to rent a unit and grow your business

HE HIGHS AND LOWS OF RETAIL RENTALS: £3.7 BILLION LOST EACH YEAR TO VACANT RETAIL SPACES

• £24.48 is the average annual price per square foot for retail spaces, with 150 million square feet of vacant retail space, there’s £3.7 billion worth of unused space in the UK

• Blackpool is the most affordable area, where the average price is 75% lower than in London, alongside having the best post-pandemic recovery score in the UK

• Oxford is the second-most expensive, just 13p per square foot less than London

• Kensington and Chelsea is the most expensive borough in London, alongside being 252% more expensive than the UK average

October 2022: Real Business Rescue has analysed current commercial retail listings to find the most and least expensive areas in the UK for business owners to open up shop. You can view the full piece here.

The cost of retail rent in areas where we’ve seen the best footfall recovery following the pandemic

The success of retail stores partially depends upon footfall, so Real Business Rescue explored the footfall recovery scores of the UK’s towns and cities (versus pre-pandemic) compared to their average rental price per square foot each year.

The recovery index score is a number between 59 and 165, and Plymouth has scored 165, showing it has seen footfall return or ‘recover’ to pre-pandemic levels more quickly than other locations. But, if you look at second place, Blackpool has the second-highest footfall recovery score in the country, alongside being the cheapest for retail rental at just £12.45 per square foot.

The worst footfall recovery score in the UK was from London, at just 59, alongside being the most expensive place for retail rent. This suggests that London is the least recovered compared to pre-pandemic foot traffic levels. This indicates that businesses in the capital might not be getting value for money paying premium retail rent when the footfall hasn’t recovered from the pandemic.

The most and least expensive retail rental areas in the UK

Home to some of the highest footfall and several tourist hotspots, it’s easy to see why London has the most expensive retail property rents per square foot. However, experts have also predicted that prime retail rentals in London city will fall by 1.1% by 2025.

In second, but not that much cheaper per square foot, is Oxford, at an average of £49.51. Although recent reports have said that Oxford is among some of the UK’s worst for empty retail units since the pandemic, retail rent could still be at a premium due to council investment in the area, a budding population of younger professionals thanks to planned new housing developments, and tourism generating £780m of income a year for local businesses.

The third highest average price per square foot per year is York at £47.75. York is a historic city, which attracts 7 million visitors a year. It was also named the third best place for independent shopping, which could explain why it has some of the highest rental prices in the country.

In terms of the most affordable retail rental price, Blackpool is the cheapest at an average of £12.45 per square foot per year. The seaside town of Blackpool saw a record boom in visitors in 2021 following the pandemic, with more than 12 million people visiting the town centre compared to about 9 million in 2019.

The most and least expensive retail rental areas in London

252% more expensive than the UK average, Kensington and Chelsea is the most expensive borough per square foot, at £86.18. The City of London comes in second at £63.96 per square foot, on average. The third most expensive is Camden, at £56.21 per square foot per year, almost £30 a year cheaper than Kensington and Chelsea.

Kensington and Chelsea is home to some pricey shopping districts and high streets including Kensington High Street, King’s Road and Knightsbridge, where you’ll find many designer fashion brands and specialist jewellers, which is likely why the rental here reflects the higher ticket-priced items sold.

Shaun Barton, National Online Business Operations Director at Real Business Rescue, comments:

“Rental prices are just one of the many rising costs affecting businesses across the nation as they battle through one of the toughest periods they’ve ever faced due to the ‘cost of doing business crisis’ and rising inflation. Not only do these prices lead to vacant retail spaces, which can have damaging effects on high streets up and down the country, but it’s another pressure point for small and medium-sized enterprises (SMEs) everywhere.

“Last July, the moratorium on aggressive debt collection among commercial landlords was no longer in effect and pressure on retailers increased significantly as a result. With the fallout from the pandemic, and now a ‘cost of doing business crisis’, it is clear that a significant number of retailers across the country are facing a battle to remain financially solvent and viable.”

-ENDS-

Notes to Editors:

*Per square foot per year

**The footfall recovery data score is all sourced from Locomiser (2021). The baseline for each footfall index is an average of weekday, and daytime footfall across 63 city centres, which is then set to 100.

Methodology:

The rental price per square foot per year was collected for all retail properties (that listed a price in this format) being offered on Rightmove and Zoopla for the top 100 towns/cities per population size. The average rental price for each town/city was collected from Realla, and combined with the average prices from the Rightmove and Zoopla data to give an overall average.

Where there were less than 10 individual listings on Rightmove/Zoopla the Realla price was used as the overall average.

Data collected 27-29 Sep 2022.

Data:

All data available upon request.

About Real Business Rescue:

Real Business Rescue is the UK’s largest insolvency practitioner helping to advise distressed businesses. With over 100 offices across the UK, Real Business Rescue have worked with directors, partners, sole traders, accountants, small and large businesses in a range of areas, from compulsory liquidation to HMRC TAX and VAT negotiations. The team at Real Business Rescue are part of Begbies Traynor, the UK’s largest independent corporate recovery specialists, as well as being the most active, handling more appointments than any other firm.