The value of retail property fell 1.9 per cent in November, the biggest drop in nine years, putting further pressure on an already turbulent retail sector.
According to statistics released by real estate adviser CBRE, UK retail property values have fallen 5.3 per cent this year, with November experiencing the biggest month-on-month drop since May 2009.
UK high street property values fell 1.6 per cent in November, while shopping centre capital values fell by 1.5 per cent. Retail warehouse property values dropped by 3 per cent, bringing the year to date return in this segment to -5.7 per cent.
The figures underscore the many challenges faced by landlords and retail property owners who are being squeezed by competitive price pressures, a shift towards online shopping, increased business rates costs, higher minimum wage, and consumer caution.
A number of high profile retailers have collapsed this year, including Toys “R” Us, which operated 105 stores across the country and employed nearly 3,000 people, and Maplin, one of the UK’s biggest electronics retailers, with more than 200 stores and 2,300 staff. As have many smaller retailers across the country, which have struggled amidst the changing retail conditions which have hit profits and sales.
Commenting on the report, CBRE UK research analyst Robin Honeyman says: “Sharp falls for retail warehouses this month resulted in the first negative capital value growth at the ‘all property’ level since the EU referendum.”
In a separate report, the CBRE has warned that the fundamental changes affecting the retail market are creating a “perfect storm”, with no one overriding reason for the steep increase in the number of retailers failing.
Miles Gibson, Head of UK Research at CBRE comments: “The perfect storm affecting retailers and their landlords is an unfortunate and probably unique combination of near-permanent structural changes
like ecommerce, cyclical economic influences like employment rates, and entirely one-off events like the EU referendum.”
In order to survive and thrive, retailers need to carefully separate out which factors have affected them and adopt strategies for weathering the storm, such as undertaking proactive store closures or responding quickly to changing consumer preferences.
Business owners also need accurate, reliable and timely financial information, whether that be profit or cash focused, or both, to accurately and effectively manage the company’s finances and drive growth.
At Beavis Morgan, our SME business experts can help you identify your requirements and then design and implement a system that will provide all the information you need, within a cost effective and efficient framework.
Being able to understand and evaluate your business through real-time information on actual performance is critical and could mean the difference between survival and business failure.
Through our partner businesses, BM Structured Finance and BM Advisory, we are able to help with sourcing and restructuring debt finance for businesses, as well as assisting with resolving issues which can impact on business performance and success, and finding innovative solutions for businesses and individuals in distress.
Our property sector specialists are also available to advise on all aspects of the property market. We act for a broad range of property investors and developers who actively need advice on how to best structure their property deals, both to ring-fence and protect their property assets, as well as to minimise the tax arising from their business operations.
To find out more about how we can assist you and your SME business, contact Steve Govey.