THE number of retail units lying empty in Scotland is at its highest level for 18 months, prompting the Scottish Retail Consortium (SRC) to call on the Scottish Government to “carefully assess the impact on firms and hard-pressed retail destinations” when it comes to setting the business rate in the next Scottish Budget.

Vacancy rates in Q2 2023 worsened to 15.9% – 0.2 percentages points worse that same time in 2022. The SCR’s vacancy monitor for the quarter, produced in association with the Local Data Company, revealed that high street vacancies worsened to 15.1% while shopping centres nudged up marginally from 20.6% in Q1 2023 to 20.7% in Q2.

Although retail park vacancies improved to 9.4% and this category remains the location with the lowest vacancy rate, the overall figures were described by David Lonsdale, SRC director, as “cheerless for retailers with physical brick-and-mortar premises and for the health of Scotland’s retail destination”.

He said: “Scotland’s shop vacancy rate nudged up in the second quarter and reached its highest level in 18 months, once again sitting above the UK average rate. The proportion of empty units is a quarter higher than three years ago, underlining the toll wrought by the pandemic and subsequent costs crunch.”

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Calling for “concrete action from policymakers” to keep down the cost of operating premises. Mr Lonsdale noted: “With stores here missing out on rates relief available to their counterparts in Wales and England, Scotland’s shopkeepers will be looking to ministers and their tax advisers to get a grip on the onerous headline business rate and to deliver on the government’s ambition to ‘use business rates to boost business’.

“After all, the business rate is at a 24-year high and government forecasters have pencilled in a chunky uplift for next spring which, if implemented, would add £34 million to retailers’ rates bills.

“The Finance Secretary [Shona Robison] must carefully assess the impact on firms and hard-pressed retail destinations when she comes to set the business rate in the Scottish Budget.”

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While the rates system in Scotland does provide significant relief for small businesses, the struggles many operators are facing – particularly in Glasgow city centre – have been well documented in recent weeks.

Notably, the high-profile restaurant Brian Maule at Le Chardon d’Or in West Regent Street attributed its recent closure to a combination of the fallout from lockdowns and Covid-related restrictions compounded by soaring food and energy costs, a protracted cost of living crisis, and the lingering effect of people continuing to work from home.

The introduction of the new low emission zone is also expected to deter people from coming into the city centre – a development hardly likely to help struggling shopping thoroughfares like the once-busting Sauchiehall Street. However, plans have been submitted to transform the former Marks & Spencer store, for so long a mainstay of the street until Covid hit, into student accommodation for more than 600 people. In addition, there are ambitious plans to redevelop the St Enoch Centre.

At the Local Data Company, commercial director Lucy Stainton said that shop vacancies had reached “critical levels”, adding: “Current challenges to businesses have been compounded by tightening discretionary spend and a dip in confidence among consumers. The economic headwinds that have made the headlines have filtered into the data, reflected in a slight rise in the overall vacancy rate.

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“The high street has seen some of the most notable impacts, with rising rents and increased competition putting pressure on small and independent businesses, who may struggle to meet high operating costs. Across all location types, vacancy has reached critical levels, highlighting an ever-increasing need to redevelop units to breathe life back into retail destinations.”

Noting that the headline findings from the Q2 monitor are “unlikely to have come as a surprise to anyone, with economic pressure from rising interest rates and inflation already mounting as the year began”, Ms Stainton said: “Retail is a diverse industry – each retail and leisure subsector faces its own unique challenges, but also, importantly, has its own unique strengths.”

Pointing to “resilient” retail parks as the only retail location type to see a decrease in long-term vacancy – more than three years – in Q2, she said they had been “bolstered by their strong occupancy fundamentals and relatively small lot sizes”.

She added: “Retail parks have shown us excellent examples of agile strategy in action, splitting larger units into smaller ones or converting space for alternative uses to successfully revitalise vacant stock. The current climate is undeniably difficult, but it should not be overlooked that today’s retailers are more innovative and future-thinking than ever.

“With the continuing trend in mind, we do not foresee any improvements to vacancy rate in future. However, given that the latest rises in vacancy have not been particularly significant, we anticipate that any increases in the near future will be gradual.”