Property firm Land Securities Group has today predicted a bleak outlook for the UK high street, claiming that many locations “may never recover” from current struggles.
Annual results released this morning by the largest commercial property company in the UK revealed a small revenue profit increase of nine per cent to £299.4 million, though EBIDTA shows a significant loss of 58 per cent compared to last year, an annual decrease to £515.7 million.
Robert Noel, Land Securities CEO, has cited the ongoing downturn in consumer spending on the high street for this loss as demand for rental space has plummeted.
“The effects of the structural shift in retail have been heightened by uncertainty in the economy,” he commented.
“The year saw weaker demand from consumers and downward pressure on rents.”
Alison Carnwarth, Land Securities Chairman, agreed, noting the increasing popularity of larger shopping centres over smaller town centres.
She said: “Attractive, well-located shopping centres and retail parks continue to trade well while leisure and multi-channel retailing are increasingly important.
“The negative impact of economic conditions on consumer spending means that certain high streets may never recover.”
Shop price inflation and consumer spending have fallen considerably as economic uncertainty continues, with pressure group the British Retail Consortium and research firm Nielsen stating last week that overall shop price inflation dropped 0.2 per cent in April as businesses tried to boost sales through heavy discounting and promotions.
Despite this news, London is bucking the trend as preparations for the Olympics ensure that tourists flock to the capital.
Earlier today, property firm Westfield Group reported a 2.2 per cent year-on-year rise in the three months to March 31st 2012, while sales in the 12 months to the start of April were up 7.1 per cent compared to the same period last year.
Noel, who was appointed Land Securities CEO in March following the departure of Francis Salway, feels that there are a number of reasons to remain positive over the outlook on the high street.
Pointing to the company’s move to own and develop Victoria Circle, a key part of its expansion plan, Noel believes that such central locations must be given the opportunity to realise their potential.
“This is a key part of our plans to transform Victoria into the thriving central London area it should be,” he explained.
“London remains the stand-out vibrant global centre that constantly reinvents itself. We are well placed to respond.”