The number of planning applications for new shops in England and Wales fell by 15% last year, down to just 6,065 in 2017/18, from 7,134 the previous year, says Lendy, Europe’s leading peer-to-peer secured property platform.
It says that the significant fall in the number of retail planning applications reflects the ongoing struggles that the retail sector is facing. The fall in the demand for shops is partly down to shift in spending from the high street to the internet, which has pushed a number of major retailers into insolvency.
This shift in consumer spending is part of the reason the number of insolvencies in the retail sector jumped by 7% last year, to 1,071 in 2017/18 from 999 in 2016/17.
Lendy explains that some major UK retailers have announced store closures and staff cuts in recent months. For example, Toys R Us recently closed all of its 100 UK stores, and Mothercare plans to close 60 shops by June 2019.
Recent research from Lendy also showed that there has been a 25% fall in the number of department stores in England.
Hammerson, one of the UK’s largest retail property developers, recently said that it would be reducing its exposure to shopping centres by 25% and high street retail premises by 20%.
Lendy adds that many of the biggest falls in retail planning applications over the last year have occurred in major UK cities. Sheffield saw applications fall 53%, to just 17 down from 24, while applications in Newcastle dropped to 71 from 118, down 46%. Applications for new shops in Kensington and Chelsea fell 39% to 78 from 130.
Despite the retail sector being under pressure, Lendy says that well-selected retail property can still represent a sound investment if it makes up part of a diversified investment portfolio.
Liam Brooke, CEO of Lendy, says “A collapse in demand for new shops is symptomatic of the issues that the retail sector is having to combat.”
“Major developers are actually selling off assets, while many other could now be adopting a stand-off approach instead of committing to spending large sums on new shops.”