New rates bills which will come into force in April following the 2023 Rating Revaluation will provide a welcome relief for many of the larger retailers and already look likely to be providing a spur to new store openings, according to John Webber, Head of Business Rates at Colliers.
Webber cites the news that M&S is planning to make a £480 million investment across its UK stores, generating over 3400 jobs and opening five new stores in 2023. The new stores will be bigger full line stores in Leeds White Rose, Liverpool One, the Bullring, Birmingham, Manchester Trafford Centre and Lakeside Thurrock* ranging from 65,000 to 90,000 sq. ft.
“Obviously other factors will play a part,” says Webber, “but there is no doubt a more favourable business rates environment will help such store expansion, particularly as the government listened to the industry and has not brought in a downwards transition scheme, so that retailers will be paying lower rate bills immediately following the start of the new list in April.”
Overall, the retail sector will see 10% decrease in Rateable Value (and rates bills) in the next list, although in some locations Colliers are expecting to see much higher reductions of 30 or 40%. Large department stores and hypermarkets were among the biggest winners for example in Oxford Street in London, RVs have fallen by approximately 30%.
Looking at M&S’s decision to open its new store in the vacant Debenham building in the Bullring, Colliers has estimated, looking at a similar property in the centre, that the rates liability of the old Debenhams store will reduce by around 47% in the new list in April. This would work out at a saving of over half a million pounds in annual business rates payable.
And looking at M& S’s portfolio as a whole, Colliers has estimated that M&S should see around a £70 million drop in its annual rates bills in the UK come the Revaluation in April, compared to its rates bills this last year – an approximate reduction of about 23%.
Some particular stores that stand out with big percentage reductions are the Marks and Spencer’s in Middlesborough, where rates bills are expected to drop (61%), Ashford (-69%), Trafford Centre Manchester (-60%), Blue Water (-47%), Westfield (-49%) Croydon (-60%) , Nottingham, (-53%) and Glasgow (-50%)
“Across the board there will be an overall substantial reduction,” says Webber, “and surely will be taken into account in M& S’s decisions to either keep stores open or open new ones.”
In making the decision not to introduce downwards transition in its latest Revaluation, the Government finally got one thing in its business rates policy right. Let’s hope we see other retailers also feel the benefits of business rates reductions and make the same decisions to invest in new store openings and jobs.”