No respite for West Midlands’ retail sector

However, while anecdotal evidence suggests greater clarity over Brexit will spur on activity this year, it is unlikely to change the fortunes of the retail market in the West Midlands.

The results from the RICS UK Commercial Property Market Survey for the final quarter of 2019 show the West Midlands’ retail sector continuing to struggle.

The number of people looking to rent retail space continued to fall as a net balance of minus 65 per cent in the quarter, continuing a downward trend that was first seen in the first quarter of 2017.

Looking at availability of leasable space, the number of empty retail units rose once again. A net balance of plus 48 per cent of respondents saw an increase in available retail space.

As more retail units remain empty, rental expectations for the coming three months and year ahead remain negative. In the coming three months a balance of minus 73 per cent, the largest net balance across all 12 regions, of respondents expect to see a fall in retail rents.

It is with little surprise that investment in West Midlands retail continued to decline in quarter four as a net balance of minus 47 per cent of respondents reported a drop in the number of enquiries for the region’s retail space. Overseas investment enquiries also reduced this quarter.

The region’s industrial sector is, once again, the most in demand with 25 per cent more respondents reporting a rise in interest.

Looking at investment, investors from the UK show the most interest in the West Midlands’ industrial sector, with domestic enquiries rising from a net balance of plus 11 per cent in quarter three to plus 23 per cent in quarter four. Overseas investment enquiries fell, albeit extremely slight, in the latest quarter extending a trend of three reports where foreign investment enquiries are down for the region.

The West Midlands office sector saw a drop in interest from prospective tenants for the second successive quarter. Meanwhile the number of available office units available rose in quarter four but at a slower rate than in quarter three.

Tarrant Parsons, RICS economist, said: “Expectations appear to have strengthened in the office and industrial sectors following the decisive outcome of the general election. That said, this improved sentiment has not found its way into the retail sector, where the outlook remains just as downbeat as before.

"Given the continued rise in retail vacancies and sharply falling demand, any change in fortunes across the sector still seems to be some way off. In the meantime, further downward adjustments in rents and capital values expected both in the year to come and further ahead."