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Jones Lang LaSalle reports signs of growth in rents for Zone A retail locations3rd July 2012

Jones Lang LaSalle's analysis of 2012 headline Zone A rents across the UK retail high street and shopping centre market reveals that there are signs of growth in rents for 11 percent of locations relative to pre 2008 crisis levels.

James Brown, Head of Pan European Retail Research and Consulting at Jones Lang LaSalle, said: "Rental levels are below pre 2007/ 2008 peak levels for 73 percent of UK retail locations, but for the remaining 27 percent, rents are at or are exceeding pre-crash levels. Pockets of resilience and growth clearly exist in the retail market, although it is patchy across the UK. This emphasises the need in this recovery phase to steer way from talking about 'the market' as a whole and to focus on a more granular level in order to identify hotspots – or areas of risk."

New record Zone A’s are being achieved in UK retail hotspots:

Looking at the top 100 retail locations by Zone A rent, 37 percent are now setting new record headline rents.

Central London outperforms

The number of locations that have recorded new peak headline Zone A rents in London has increased to 42 percent, versus 11 percent nationally. New Bond Street remains in pole position at £950 Zone A, representing 53 percent growth since 2007. Old Bond Street saw 38 percent growth over the same period to £825 Zone A and prime Oxford Street 53 percent to £725 Zone A. Regent Street, Carnaby Street, Covent Garden and Burlington Arcade are also recording peak rents.

Rents for a further 16 percent of locations in the London area are static whilst the remaining 42 percentare below previous peak levels, versus 73 percent nationally. Whilst highlighting London’s overall relative out performance, some sub-markets still have some way to bounce back.

A polarised market; both rental declines and growth forecast

Approximately 25 percent of existing UK high street and shopping centre leases are due to expire during 2012 and 2013 according to research done earlier this year by Jones Lang LaSalle. These lease expiries will act as a catalyst for further rental growth in locations with strong market fundamentals, although in some weaker locations further rental declines are inevitable.

Carrie Sanders, national director, Shopping Centre Management at the Birmingham offices of Jones Lang LaSalle, said: "There are pockets, which have shown signs of rents exceeding pre-2008 peak levels. Outside of London, some of the larger markets that have recorded notable new peak levels include: Guildford, Oxford, Bath, Brighton, Colchester, Edinburgh and York, but our analysis certainly supports the trend towards polarisation. Despite the obvious headwinds facing the sector, opportunities clearly exist. Some locations will inevitably continue to slide against the backdrop of challenging market conditions, but as we have been predicting, retail locations with a raison d’etre will continue to out-perform."

"We believe that there are some good growth stories to come across the UK, although it is clear that in some regions in the short to medium term, rental growth will be an exception rather than the rule."


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