Rental values still in downward spiral

Pub rental values are still being hit by the economic decline that began in 2007 and it is difficult to predict when an uplift may occur.

That's according to Fleurets' new Pub Rental Survey, which points to rents being flat or in decline — or, at best, modestly increasing — in most UK regions in 2010 against 2009. The traditional pub sector in London's West End is the only category to enjoy a significant uplift in the past year, up 5.1%.

Fleurets director David Sutcliffe said: "During the time Fleurets has produced the survey [26 years], we have experienced three official recessions. However, the current prolonged economic difficulties are arguably the worst we have witnessed.

"What started in late 2007 is still with us four years later and having an impact on rental values. Given the current Government spending cuts, rising taxes and persistent inflation, it is difficult to predict when we might start to see an uplift."

Sutcliffe said the environment remains "relatively quiet" — and will continue to be so for the foreseeable future — with pubcos disposing of bottom-end sites and high-street bar operators consolidating or buying fitted-out units.

However, he predicted a possible uplift in rental values once positive results from major managed pubcos filter through to the property market.

Average rent in traditional free-of-tie pubs in the West End reached £95,716 — up 5.1% on 2009 and a rise of 22% on 2005.

Elsewhere in the capital, rents were in slight decline. They fell 1.04% in the City to £71,551, while outer London experienced a decline of 0.99% to £62,811. The fastest year-on-year decline was in the south-east, where rental prices fell 11.2% to £51,630 and are now at 2007 levels. The Midlands saw the highest rental increase over five years — 19.5%.

Among high-street bars, rents declined in all three regions of the capital in 2010 against 2009: by 1.16% in the West End (£228,444), 1.19% in the City (£165,399) and 2.45% in outer London (£113,047). Rents rose 2.1% on 2009 in the north, up to £111,443, while in the Midlands they were up 0.5% to £106,945. Elsewhere, rents fell by 1.9% in the south-east (to £102,601) and by 0.8% in the south-west and Wales (to £111,142).