Retailers are facing the largest yearly rent increases since 2008, up 1.8% on average across the UK. However, with the divide between the best and worst locations is growing, leading to huge variations for retailers from region to region.

The data from Colliers International reveals good and bad news for retailers. Prime shop vacancy has decreased for the first time since 2014, the number of areas where rent is decreasing has doubled and London retail rents are cooling to 3% compared to previous double digit growth. However, while there are less empty shop units those that are empty are staying empty longer and some areas are experiencing rent increases of over double the average, such as Scottish retail units which have increased up 4.5%

The rent increases in Scotland match overall property values, with a 258 square foot newsagents in Edinburgh recently selling for £1m, making it the most expensive commercial space in Scotland per square foot.

Comments from Collier’s head of retail capital markets, James Watson, hints that an upcoming influx of retail units on the market could suppress retail property prices, providing an opportunity for retailers to move from renting to owning a shop. Watson states, “An increased supply of stock from forced sales in the secondary markets may not be that far away. This is not great news for those who are sitting on assets where the debt-value equation is heading in the wrong direction, but it will be positive for buyers who are sitting on a mountain of cash.”

The research also found the continental European model of shorter leases is becoming more popular in the UK, apparently driven by pressure from shop owners unwilling to sign the type of multi-year deals that dominate the UK market.

Inflation in rents is also expected to be outpaced by inflation in business rates, with CVS warning retailers of ‘more pain to come’ in 2018.