Property News - Fall in demand slows shop rent growth to 0.5%

The average rate of rental growth for high street shops across the UK slowed to just 0.5 per cent a year by the end of last year, according to research by Donaldsons.

Even the fast-growing out-of-town sector has seen a slowdown, with average rental growth down to 3.3 per cent a year in the final quarter of the year against a rate of 4 per cent three months previously.

Shopping centre units are the only part of the retail sector to see continued strong growth, according to Donaldsons, with annualised growth of 3.9 per cent a year over the final quarter of last year.

The report pointed out that shopping centres have traditionally proven more resilient during a downturn.

The report linked the slowdown in retail growth to reduced demand by retailers for new shop units.

Donaldsons head of retail Brian Duncan said: 'For retailers, slower rental growth is good news. Rising rents on high street properties had been cutting into retailers' margins and undermining profitability.'