2022 was the year that the UK emerged fully from the Covid-19 pandemic and begun to reassert itself. Nowhere was this felt more strongly than in the retail sector which had suffered greatly during that time.
Despite a cost of living crisis, rising interest rates and ongoing economic instability, 2022 ended up delivering positive outcomes in retail which inspired a quiet confidence in the sector that would have been hard to predict a year earlier.
The Consumer Price Index (CPI) reached a historic high of 10.7% in November 2022, following a previous high of 9.6% in October according to the Office for National Statistics. However, the ONS reports that by December, the annual CPI rise had fallen again to 10.5%.
This was the culmination of a trend and future economic forecasts make it likely that 2022 saw CPI peak, and that the December figure represents the beginning of a longer-term fall back to normalcy. Stronger than expected Christmas trading figures back this up and could show that confidence is returning to the retail sector.
If this is the case, we should be able to see evidence of it in other places. The FY 2022 Retail and Leisure Analysis Report gives us further indications that the recovery is underway.
The research shows that the gap between openings and closures has narrowed to its smallest point since 2016. The NET change in unit openings compared to closures was -3,365 units – a 57% annual decrease.
This is significant for two reasons. Firstly, that the damage dealt to the retail sector during the pandemic is easing. Secondly, that the recovery goes beyond those years and the retail sector is beginning to be comparable to times before the pandemic even occurred. Thirdly, it shows that retail businesses are more resilient and better prepared for economic shocks than they have been in recent years. These are all positive indicators which bode well for the future.
The research also shows that vacancy rates declined across all types of retail real estate in 2022. This is a key indicator of the health of the sector and the numbers are encouraging reading.
Overall, the national average vacancy rate was 13.8% at the end of 2022 which represents a decline of 0.6% over the same period in 2021. While on the surface this could be seen as only a small drop, it is in fact the greatest year-on-year decrease since 2013 when records began.
While the overall rate is still higher than in 2019, the rate of progress when it comes to vacancies is not just reassuring, it is unprecedented. This is in part being driven by a revitalised leisure sector where many landlords are seeing an opportunity to open up destinations like food halls, restaurants and other entertainment venues.
These are being opened at a faster rate than retail units are being closed and speak to a healthy high street – the basis of retail real estate strength. Commercial real estate statistics like this show that while we have a long way to go in 2023, the groundwork for a revitalised retail sector was laid in 2022.
Charlotte Jarrett, Head of Retail at FIREM, said: “There is no pretending that 2022 was an easy year for the retail sector, but it ended on a positive note with plenty of indicators that the future is bright.
“Falling vacancy rates, fewer closures, more openings and falling CPI all point to 2023 being a year of opportunity for all involved in retail. We’re excited to work with our retail and leisure partners to make sure this year builds on the promise that 2022 showed us and make the coming year a success.”
Are you looking for the perfect space for your retail or leisure business? 2023 could be the perfect time to move to new premises and make the most of the economic recovery. If you are looking for more commercial property insights or to learn more about our available retail spaces, get in touch with the team today by clicking here.
