The North and South Divide - Can the High Street Recover?
Posted by The Landsite on 4th May 2023 -
The retail industry remains a significant driver of commercial real estate value in both the North and South of England, shaped by a range of factors, including economic growth, population density, and consumer behaviour. As the past decade has witnessed dramatic changes to the retail industry, the North has been particularly hard hit, with high street retailers struggling to keep up with the changing retail landscape and facing challenges such as economic decline and lower consumer spending. Reports suggest that nearly a fifth of shops in the North East are currently lying vacant compared to one in ten in the South. Major retailers cutting back on the number of physical stores has left many high streets looks tired and abandoned.
By contrast, the South has benefited from a generally stronger economy and higher levels of consumer spending, which has helped to sustain retailers and limit the number of shop closures. Undoubtedly, London’s retail sector plays a significant role in driving the growth of commercial real estate value in the region. However, London has not remained bullet-proof from the economic downturn. Retail Week revealed that Oxford Street now has more empty units than the average British high street - with 42 of its 269 shops lying vacant.
A trend which looks set to continue to affect towns and cities up and down the country is out-of-town shopping destinations. More and more retailers are opting to close high street branches in favour of convenient and accessible retail parks and shopping centres. In addition, E-commerce continues to play a huge role in the decline of the high street with consumers continuing to shop online. PwC and Local Data Company reported that the online shopping in the fashion sector had grown from 12% of the market to 23% since 2015, though the current rate is below the 64% seen two years ago during the third pandemic lockdown in the UK.
Efforts are being made to address the North and South divide, including government-led initiatives to promote investment in the North and encourage retailers to expand their operations beyond the South. Additionally, the growth of online shopping has opened up new opportunities for retailers to reach consumers in the North and has helped to level the playing field in terms of commercial real estate value.
Whilst the North-South divide in the retail industry's impact on commercial real estate value persists, there are signs of progress towards greater parity.
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