Comment - Demand stays high at prime locations

Cushman & Wakefield Healey & Baker's latest data on high street vacancies seem to run counter to the received economic wisdom.

With the economy slowing and tourism facing disruption from the threat of terrorism and the reality of war, logic would say a forest of estate agents' boards should be sprouting on the high street. But that is not the case.

What seems to be happening is that there is a flight to quality taking place. At a time when retailers have to scrutinise every acquisition closely, the ones that are easiest to justify are those in tried and tested locations.

So despite all its problems, central London is still a place where retailers want to trade, and the number of shops available in the market has continued to fall.

What the research does not tell us is what is happening in secondary pitches - it could be that letting agents are finding it tougher to shift off-pitch shops. But it is places such as Oxford Street and Princes Street that are the real bellwethers of UK retail. And they are not doing badly.

Of course, this cannot go on indefinitely - eventually, if the number of business failures continues to rise, then there will be more sellers than buyers of shops even in the best locations. At the moment, if I ask the Retail Week photo library for a picture of a row of 'to let' boards on a prime pitch, then the best they can come up with is some dog-eared old print from more than a decade ago. How long before we can send out a photographer for a fresh version?

On this count, the jury is still out. Of course, when Chancellor Brown finally gets around to giving us this year's Budget speech, he is going to put a positive gloss on things.

But the economic picture is not unremittingly gloomy in the UK - the economy is still growing, albeit at a slower rate than of late. And unemployment has fallen to such an extent that the Government no longer feels obliged to cook the books and has reverted to a more sensible measure of the dole queue.

Two things could blow the economy off course. One is a long and ruinously expensive war in the Middle East, which looks unlikely in a conflict between US technology and Iraqi conscripts. And the other is massive disruption to oil supplies, which is marginally more likely to happen.

But the betting still has to be put on a soft landing for the economy and a continued strong market for retail property in the UK.