British Land has begun to feel the affects of the challenging retail market as its occupancy rates are hit by the rising number of CVAs.
The property giant’s latest trading update revealed that a two per cent drop in retail occupancy rates had offset a rise in office lettings.
This was largely due to a rise in CVAs, which now account for 1.6 per cent of British Land’s group rent since April 1, up from one per cent in May, while retail occupancy rates dropped to 96.4 per cent.
“As we communicated at our preliminary results in May, the retail market remains challenging,” British Land said.
“The impact of long term structural change driven by the internet is being compounded by short term trading headwinds.
“As a result, there have been well publicised retailer failures and further CVAs from those operators with more challenged business models.
“We are seeing increased polarisation but continue to believe that British Land assets are on the right side of this trend.
“Since the year end, we have let 128,000sq ft of retail space and placed a further 97,000sq ft under offer, overall six per cent ahead of ERV”.
During the period British Land submitted a planning application for a major development in Canada Water, proposing a first phase including 250,000sq ft of retail and leisure space, 650 homes and one million sq ft of work space.
The wider masterplan for the project includes one million sq ft of retail and leisure space, and if it is approved construction of the first phase will begin in spring of 2019.