Planning applications for new shops falls for ninth consecutive year
Planning applications for new shops have fallen for the ninth year in a row as the high street continues to struggle, says Lendy, one of Europe’s leading peer-to-peer secured property lending platforms.
New research by Lendy shows that the number of planning applications for new shops and shopping centres in England are down 55% since the credit crunch to just 6,090 in 2017 compared with 13,500 in 2008. As retail spend continues to shift from the high-street to the internet, retail vacancy rates have risen to more than 12% and many retailers have put store openings on hold or closed underperforming outlets.
Planning applications for new shops and shopping centres fell another 8% last year.
Lendy adds that falling consumer spending and Brexit uncertainties could also be forcing retailers to delay decisions on store openings.
The drop in the number of planning applications for new shops is another symptom of the challenges the retail sector is facing. 118 retail businesses went insolvent in 2017, a 28% rise on the previous year. Of note, Debenhams was forced to issue a profit warning following poor Christmas sales, and House of Fraser have requested a rent cut.
Lendy says that retail property can still represent a sound choice for property investors, but those considering retail property must to do so with care. Well-sited retail property can operate well as part of a diversified portfolio of investments, but investors must pay attention to the strength of the retailer, as well as ensuring the rent being paid on the property makes up for the additional risk of the retail sector.
Liam Brooke, co-founder of Lendy, said:
“Investors in shops and shopping centres had been used to rents only ever going up, safe in the knowledge that any vacancies could be filled by one of a number of expansion-minded retailers. The recession and the boost to ecommerce from smartphones ended all that.
“Falling planning applications for new shops is a direct result of the pressures the retail industry is dealing with at the moment.
“Consumers can now get all the products they need on the internet, and as a result, retailers are seeing less need to invest in their high-street presence.
“Retail property, when carefully selected, can still be an effective part of a diversified investment portfolio. Investors must do their own due diligence when investing, and be aware of the market risks – whether residential, commercial, or retail.”