Landlords call for retail therapy as 25,000 shops close

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New figures published by the Local Data Company show that 10 per cent of retailers closed between January and September this year.

From a survey of 251,462 firms across over 705 centres across the UK, 25,090 closed. In London alone, 7,628 firms shut their doors in the first nine months of the year. The British Property Federation (BPF) has called for greater government help to support retailers. The trade body has also been leading a charge to cut service charge costs for businesses and make business leases more transparent.

The figures follow recent GDP figures and come months ahead of a planned increase in business rates which will put extra pressure on to tenants. Many retailers will see their rates bills massively increase because they have been reassessed based on property values on 1 April 2008. Research by BNP Paribas Real Estate has shown that the government has misled firms over the effects of the change.

The bills companies face from April 2010 will be the first based on this revaluation. There are large regional disparities in business rates with retailers in the South West and London facing the biggest increases. Retailers pay a quarter of all business rates, despite being responsible for 8 per cent of GDP. Added on top of this, many retailers, like landlords, have empty space they cannot re-let because of the recession.

Landlords have been working closely with retailers to offer better terms and be more flexible. In July, Focus DIY was saved by its landlords rent concession, saving 5,000 jobs. Before that, JJB Sports had also been saved after it too agreed a company voluntary agreement with its creditors.

However, successful retailers have been criticised for their moves to try and get out of leases too, even though they have not been in trouble. Landlords have stressed that maintaining rent levels is vital to allow them to invest in new property. Francis Salway, chief executive of Land Securities, the developer which last week opened Cardiffs new shopping centred, said: "The downturn has been tough for property companies and retailers. There are instances of retailers still asking for concessions, and it can be in our interests to show flexibility in specific areas - and we have led on a number of such initiatives. However, we do not believe across the board changes to agreed contracts are appropriate."

Liz Peace, chief executive of the British Property Federation, said: Business secretary Lord Mandelson said the governments empty property tax was good for business. But if charging a hardship tax on firms vacancies is the governments idea of helping business then Id hate to see him helping an old lady across the road. Clearly no one is escaping the recession and its vital that ministers offer real help to businesses through a sensible mitigation of the impact of next years rise in business rates and a cut in empty property rates. In order to maintain investment in retail regeneration, developers need to be able to maintain returns which are generated from keeping rents at a certain level.

She continued: Basically, if landlords cannot earn money through rents, they cannot afford to rebuild our towns and cities. When you consider that just last week, Cardiffs new St Davids 2 shopping centre opened employing 4,000 people, you realise the massive contribution these developments make to local economies. Although the comparatively good performance of entertainment venues suggests Britons are still a fun-loving bunch, the high closure rate of department  and fashion stores suggests that a more fundamental re-structuring of these sectors is on the cards, along with others that have an unsustainable level of competition.