High streets hit by prosperity gap as retailers abandon ailing towns

SCOTLAND’S high streets are suffering from a widening prosperity gap as investment is increasingly focused on key locations.

New research published this week will warn that retailers are likely to abandon some towns, piling pressure on the authorities to take remedial action.

The findings show that rents have fallen sharply in many large centres, indicating a lack of interest among potential store occupiers.

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In its 70th biannual Scottish Property Review, Edinburgh-based consultancy Ryden notes its retail rent index has fallen to a 12-year low and is down by 11 per cent since October.

The firm also describes the recent decision by Tesco to put its superstore expansion drive on ice as potentially a “watershed moment”.

There are fears that if others follow suit it will have implications for property development in general. Major food store operators tend to act as the anchor tenant in large mixed-use schemes.

Mark Robertson, Ryden’s head of consulting and author of the report, said: “The investment pipeline is heavily focused on Edinburgh, Glasgow and perhaps Dundee.

“It is not filtering down to that second tier of large towns. The short-term outlook for these locations is poor as vacancy rates are rising and rents are falling.”

He told Scotland on Sunday: “It’s not just the likes of Paisley being damaged by nearby Braehead, you are looking at locations that have been successful, such as Edinburgh’s Gyle centre, Falkirk and Hamilton. They are starting to look older generation now, and losing custom to the very large destinations elsewhere.”

The property review, which is due to be posted out to clients shortly, details every major office, retail and industrial letting and investment deal over the past six months. It is seen as a trusted benchmark of the Scottish marketplace.

Robertson said major shopping locations were defying the “signs of stress” seen elsewhere, and attracting investment and “limited new development”.

The study cites plans to extend Buchanan Galleries in Glasgow, the opening of a flagship Primark store on Edinburgh’s Princes Street and a series of lettings in Dundee as examples of that buoyancy.

Robertson said the tier of centres below the major cities would need to increase the emphasis on mixed usage, with more leisure facilities, office space and housing.

“Local authorities now realise this a real difficulty, rather than economists telling them this is something that is likely to happen,” he added. “There are a number of headwinds including unemployment and inflation that are due to peak this year, so some of these pressures may come off later. But, fundamentally, I don’t think those things easing will give the kind of growth that some of these retail locations need.”

Recent industry research suggested that six high street stores closed every week in Scotland last year as the downturn intensified. Ryden noted that a number of big names, including Mothercare and Thorntons, were currently in “pruning mode” and looking to close under-performing stores.