We are all familiar with the difficulties faced by retail tenants locked into short and medium term fixed leases, faced with static overheads (at best) and sustained weak demand. Rents and rates are often simply too much and it is no coincidence that this is one of the most common reasons cited for businesses closing and a significant contributor to rising vacancy rates.
Work we have been doing in many market towns recently has highlighted that alongside this, high proportions of owner occupier retailers can paint a misleading picture of health in some traditional centres and lull people into a false sense of security.
In many instances, owner occupier retailers are 3rd, 4th or even 5th generation family businesses and are a key ingredient in what makes our town centres so special. Mortgages on their premises have long since been paid off and the principal property costs are rates and utilities. Relative to leaseholders, owner occupiers are in an advantageous position but even so struggle to survive in the current climate.
So how much worse could the situation in town centres become if these owner-occupiers slowly decide to shut-up-shop and properties move onto the letting market? And how much do owner occupiers distort the picture of the true health of traditional town centres?