Rents fell by 0.4 per cent last year – the first annual fall since 1993 when they slumped 1.9 per cent, according to property firm King Sturge, which forecast that rents will plummet 5.6 per cent this year, 4.7 per cent in 2010 and 2.1 per cent in 2011.
The drop is welcome news to embattled retailers, which are now in a better position to negotiate with landlords.
King Surge expects no growth in 2012 but forecast an increase of 1.6 per cent in 2013.
King Sturge head of retail research Stephen Springham said: “It is not going to be an easy 2009 for retail sales, but there will be some leeway on the rental side, which will allow retailers to continue trading on slightly more favourable terms – giving them some much-needed breathing space."
King Sturge said that more than 90 per cent of the 2.5 million sq ft of new shopping centre space that will open in 2009 will be leased. But, it added, leases will be on favourable terms to retailers, which can expect benefits such as monthly payments, rent-free periods and generous incentives, such as contributions to shopfitting fees.
Springham added: “Most retailers will push for monthly rents. It is a bit more than retailers whingeing – 12 payments a year does give you a lot more fluidity. Landlords will have to back down on a number of issues.”
In recent months House of Fraser, Mosaic and DIY chain Focus have agreed monthly rents with their landlords.