An independent study by the Investment Property Databank (IPD) has found that High Street leases are over a third less valuable than they were in 1989.
Since 1989, shop rents have gone up 24 per cent versus inflation of 94 per cent over the same period – in real terms, this equates to a fall of 37 per cent. That’s a drop of more than a third over the past 20 years.
The IPD presented the research to Mary Portas, the Queen of Shops, to help with her government review of the High Street.
Liz Peace, chief executive of the British Property Federation, said: "The data clearly shows landlords are increasingly flexible and retail property leases continue to adjust to economic conditions, with leases that are shorter, offering breaks and substantial rent-free periods to help new shops to get off the ground.
"Whilst rents in prime retail areas and sites such as shopping centres will have increased substantially, many high street shops will have rents that in real terms are substantially lower than in 1989."
The study of 47,708 retail tenancies also found that an increasing number of leases are incorporating break clauses. Today, 34 per cent of new High Street leases have a break clause compared to just 3.9 in 1999.
The average lease length was 5.7 years.
Peace said: "During the last early-90s recession, there were legitimate claims from the retail community that the ‘institutional lease’, which commonly was for 20 years plus, with upward only rent reviews and no breaks, was inconsistent with many retailers’ needs. The property industry has significantly changed the variety of its offer and I don’t think that is always well recognised.
"The issues facing our high streets are extremely complex with recession, structural changes caused by the internet and consumer preference all in play. In such times of change it is important that leases adapt."