Corporate insolvencies in England and Wales were broadly stable in August 2025 relative to July (with a 2% deduction witnessed), whilst reflecting a 6% increase on the same period last year. Monthly company insolvency numbers in the first eight months of 2025 were slightly higher than in 2024 and at a similar level to 2023, which saw a 30-year high annual number of insolvencies.
Wholesale and Retail Trade represented the sector with the 2nd highest number of insolvencies in August, behind only construction, continuing historic trends.
Within the property market, the retail sector’s struggles have been well documented.
Sales volumes continue to remain below pre-pandemic levels, with retail locations becoming ever more divergent. The difference between the best and the rest has never been greater. The definition of prime locations has tightened, and even larger cities are seeing activity concentrate into a handful of strong shopping centres at the expense of the surrounding high streets.
Secondary pitches and smaller towns that lack “character” appeal or a unique selling point/retailing offer, are seeing virtually no demand, with few alternative uses appearing viable.
Despite these challenges, however, it is not all bad news.
The sector has witnessed a decrease in corporate insolvencies on a rolling 12-month basis, with a c.15% decrease in insolvencies within ‘Retail trade, except of motor vehicles and motorcycles’ between August 24 and July 25, relative to the preceding 12-month period.
The apparent uptick in retail market performance has also borne out to some degree within property market activity.
The above chart shows an increase in retail sales volumes from Q2 2024 onwards, with a reduction in average retail property investment yields over the same timeframe.
Certain aspects of the retail market are also showing signs of a resurgence. Numerous fashion, fast food and particularly convenience food stores are expanding rapidly. Strong market towns, larger cities, regional shopping centres and the better out-of-town locations are seeing healthy demand. In some locations, high street units coming available are going to “best bids” and rents are under upward pressure.
The recent falls in retail yields also reflect increasing investor appetite and optimism for the sector. We would however, temper the conclusions which can be drawn from the data, noting that the statistics partly reflect the low level of transactional activity, with those sites which have been sold generally being of better quality, where occupier demand is strong, trading is healthy, and rents are moving upwards. Properties with strong fundamentals are enticing investors back into the sector, but on a very selective basis.
Looking ahead, there are several matters which could impact the retail property sector. We have explored some of these below.
Ban on upward-only rent reviews
- The Government’s Bill proposing a ban on upward only rent reviews was intended to support the retail sector and SME tenants, which are the lifeblood of many high streets. However, the benefit to the majority of traditional high street retailers is unlikely to be material.
- Short lease lengths (i.e. sub-5 years) with frequent break clauses and alternative rental structures (such as indexation) are commonplace within the market.
- The proportion of retail tenants that will actually benefit from such a ban is therefore questionable.
- The bigger question is what impact the proposal will have on high street and retail investment, given the Bill’s introduction without any warning or consultation.
High Street Rental Auctions
- Rental auctions were introduced from December 2024, granting local authorities the power to lease out qualifying vacant commercial properties through auction, even without landlord consent, under specific conditions.
- There were question marks at the point of rollout as to how impactful the measure would be, given the measure doesn’t fundamentally change the structural issues the high street is facing and the limited funding provided to local authorities to implement the scheme.
- Only 11 councils have signed up to the scheme to date, and as such, there is limited evidence as to the practical ‘on the ground’ effects.
- Broxtowe Borough Council became the first council to issue a ‘High Street Rental Auction (HSRA)’ notice in September. Whether this becomes the first of many remains to be seen.
Business Rates changes
- The government has proposed an amendment to the business rates system to reduce the rating liability for Retail, Hospitality and Leisure (RHL) properties with rateable values (RVs) below £500,000. This would be funded by an increase in the business rates multiplier for all properties with RVs of £500,000 and above.
- Whilst ostensibly providing a benefit to large swathes of retail premises, the impacts are likely to be more nuanced.
- Larger stores, which typically act as anchors for high streets and shopping centres, will be detrimentally impacted, with site profitability and viability challenged as a result.
- Research from the British Retail Consortium suggests that 400 large-format stores are at risk of closure from the proposed surcharge.
- The loss of large and anchor stores would undoubtedly have a detrimental impact on high street footfall and the trading performance of the smaller stores that the changes aim to support.
- Proponents for the changes argue that rating liability will be more fairly spread, relieving smaller retail occupiers and shifting the burden to large businesses, who are more equipped to cope with the tax burden. The playing field between physical bricks-and-mortar retailers and online occupiers will further be levelled as a result of increased rating liability on distribution warehouses and fulfilment centres.
Watling continues to remain abreast of challenges and opportunities within the retail sector on a national basis.
Should you require any support in respect of your retail portfolio, do not hesitate to contact us.
