GVA report: 2015 Scottish retail trends
In the sixth edition of the retail bulletin, GVA James Barr covers the latest indicators and emerging trends that are influencing Scotland’s towns and wider retail markets. The economic outlook is healthy with 2014’s positive growth, calculated at just under 3 per-cent by the year’s end, set to continue throughout 2015. With unemployment falling and wage growth outpacing inflation, there is increased positivity in the commercial property sector due, in no small part, to increased employment figures, the associated boost to household incomes, and the increase in consumer spending that results.
The steady economic recovery is now spreading from Scotland’s major cities to larger towns and satellite locations. Although some retailers are continuing to rationalise portfolios, the trading reports are widely mixed. Demand for prime location retail property remains consistent, showing retailer expansion at the prime and value ends of the market, and where supply is scare a consideration of peripheral areas is increasing in popularity, with town centres becoming increasingly creative in an effort to find alternative methods of filling the void in demand.
Rental property performance indicators have shown a sharp acceleration in growth. Indeed, average Scottish town centre rental values, in just less than six months, have increased by an annual equivalent of 1.9 per-cent. Expectations are that rental growth will continue to gradually rise as better wages and employment growth both positively affect shop vacancy rates and retail sales. As demand for commercial property continues to be buoyed by both domestic and overseas interest, downward pressure is influencing property yields UK wide. There has also been significant growth in service floorspace and convenience floorspace, although the lack of comparison floorspace growth is a reflection of the scarcity of development activity. Research indicates that the retail market will continue to be highly dynamic, with the sustainability of Scotland’s high streets requiring innovative collaboration across the public sector, catchment area and local businesses.