Service charge by location
The shopping centres analysed have been divided into three regions:
- Region 1: London and the South East - a total of 31 centres.
- Region 2: South, South West, Midlands, East Anglia and Wales - a total of 42 centres.
- Region 3: the North, Scotland
We suspect that variation between the three regions is largely a reflection of the differing costs of living across the UK. Therefore, it is not surprising that Region 1 has proved the most expensive region for the tenth consecutive year.
CHART 17
Average service charge progression by location (£ per sq ft)
Average service charge progression by location (£ per sq m)
CHART 18
Average service charge progression by location (against RPI)
We suspect that variation between the three regions is largely a reflection of the differing costs of living across the UK. Therefore, it is not surprising that Region 1 has proved the most expensive region for the tenth consecutive year.
Findings
Region 1 remains the most expensive region at an average service charge of £5.79 per sq ft. Region 3 is the second most expensive region at £5.14 per sq ft and Region 2 is the least expensive region at £4.35 per sq ft.
As CHART 18 illustrates costs in all three regions have increased in excess of RPI since 1998. The most dramatic increase over and above RPI occurs in Region 3 where costs for 2007 are 60% above the RPI adjusted figure first recorded in 1998.
Costs in Region 3 have increased by 27.22% over last year's figures. These cost increases have been driven by a 34.93% increase in Management expenditure along with the fact that Exceptional Expenditure has quadrupled between 2006 and 2007 from an average of £0.02 per sq ft to £0.08 per sq ft in 2007. We suspect this increase in exceptional expenditure is a result of increasing pressure to compete with new developments in the region coming online in 2007/8/9 resulting in more extensive refurbishment and decorative works.
Since 2000, Region 2 and Region 3 have tracked each other fairly consistently, it will therefore be interesting to note in the 2008 report whether the large difference between them this year will self correct.