Table 1 - Size and type (no of centres)       Table 2 - Location and size (no of centres)         Table 3 - Location and size (sq ft)         Table 4 - Region and type (no of centres)         Table 5 - Average - cost class and type (£ per sq ft)                     Table 6 - Average service charge by cost and year (£ per sq ft)                                  Average service charge progression by cost class (£ per sq m)         Chart 1 - Average service charge progression by cost category (£ per sq ft)                       Chart 2 - Average service charge progression vs RPI (£ per sq. ft)

Retail OSCAR enables owners and occupiers of shopping centres to benchmark the service charge payable on their individual centres against industry recognized average figures. The average service charge by type (including exceptional expenditure) has increased from £4.45 in 2007 to £4.56 per sq ft in 2008, an increase of 2.56%. Chart 2 illustrates that average service charge continues to increase in excess of RPI, however, once RPI inflation is stripped out, the average service charge has risen by £0.49 per sq ft since 1998. Findings The most expensive type of shopping centre is still 'Enclosed/Air Conditioned' at an average of £5.23 per sq ft (including exceptional expenditure) which reflects a decrease of 7% from 2007. The difference in rate per square foot between air conditioned and non air conditioned centres continues to decrease with the 2008 sample reflecting a difference of 22p per sq ft as opposed to 44p per sq ft in 2007 and 76p per sq ft in 2006. We suspect this is a result of the drive to increase energy efficiency leading to HVAC plant either being used less or air conditioned centres making changes to the existing systems to ensure maximum energy efficiency. The cost of Utilities has continued to rise in this year's sample reflecting an increase of 16% against the 2007 figures. As mentioned in last year's report, the drive to reduce or control energy usage in shopping centres should theoretically have capped, or in most cases reduced, actual energy consumption across the board, therefore it is fair to assume that the increase in overall utility costs is a direct result of increased unit prices in the volatile energy market. The appointment of energy procurement consultants should protect shopping centre owners and tenants from the volatility of the energy markets as mush as possible, however, we expect to see the continuation of these increases in the 2009 report. Soft Services remain the most expensive cost class accounting for 47% of total expenditure, followed by Management (25%), Hard Services (16%), Utilities (7%), Exceptional Expenditure (5% ) and Insurance (1%). These figures reflect the same split of expenditure as last year with no major variances at all.

Expenditure on shopping centre marketing and promotions has decreased for the 3rd year in a row from £0.50 per sq ft in 2005 to £0.33 per sq ft in 2008. We believe this is a result of marketing budgets being reduced across the board as landlords and their agents look to reduce service charge costs and ensure that the money that is jointly invested by the tenants and the landlord is used as efficiently as possible.

Exceptional Expenditure has seen another very significant increase in 2008. This year's sample reflects a 75% increase from the 2007 rate of £0.12 per sq ft to £0.21 per sq ft. As previously mentioned, as familiarity with the new RICS cost classes increases, more and more items of expenditure are being taken out of various categories (predominantly M&E and Fabric Repairs) and included under the heading of Exceptional Expenditure. An aging sample size (2008 average date of construction 1983) also means that as centres pass 20 or 25 years old, major works such as lift car and fire protection system replacements are required resulting in increased service charges.