There are two methods to calculate the 'average service charge' - the first method is to use the overall average of all the respondents' figures. This can, however, result in skewing of data due to over representation in certain categories. In order to remove the risk of skewed data the 'average service charge' in this report is calculated using the second method which involves taking the overall average figure for each category and then calculating the average of these figures. We consider this method a far more accurate representation of service charge costs across the spectrum. It should also ensure the average figures are not unduly affected by any variances across the sample from year to year. Shopping centres across the UK vary significantly in terms of construction, age, staffing levels, amounts of common space, levels of security, number of lifts and escalators etc. All these variables must be considered when applying Retail OSCAR indices to individual properties. Principal findings of the 2008 Retail OSCAR

The average service charge, including exceptional expenditure by type, has increased from £4.45 per sq ft in the 2007 report to £4.56 per sq ft in the 2008 report, an increase of 2.5%. Average service charge by type (excluding exceptional expenditure) has increased from £4.33 to £4.36 per sq ft, an increase of 0.70%. By way of a comparison the Retail Price Index increased by 4.6% during 2007

In fact, service charge expenditure (including exceptional expenditure) has decreased in Enclosed Air Conditioned, Enclosed Non Air Conditioned and Part Enclosed schemes, primarily lead by decreases in marketing spend. Moreover, removing exceptional expenditure from both Enclosed Air and Non Air Conditioned schemes also shows a decrease, suggesting an underlying reduction in like-for-like costs. Service charge expenditure in Open schemes has increased partly as a result of rising Exceptional Expenditure costs and also soft services. This increase is in turn driving the increase in the overall average

The average date of construction of the 66 centres which specified their dates is 1983. As the centres in this report are on average 25 years old, large items of exceptional expenditure are becoming common place 77 centres reported the previous year's figures: 48% showed a reduction or nil increase with 52% showing an increase, 39% in excess of RPI The labour intensive Soft Services category (Cleaning, Security and Marketing) contributes the greatest proportion of service charge expenditure again this year at 46.89%, an increase from the 2007 level of 45.73%. This figure is broadly consistent with the last 5 year's figures   Larger centres continue to show the lowest running costs as a result of economies of scale For the eleventh consecutive year Region 1 (London and the South East) was the most expensive region Costs in Region 3 (North, Scotland and Northern Ireland) continue to be higher that those in Region 2 (South, South West, Midlands, East Anglia and Wales), however, the costs in the 2 regions are starting to get closer to each other again after Region 3 surged ahead in the 2007 report Management costs have increased to an average of £1.13 per sq ft compared to £1.09 per sq ft in 2007. This increase is being driven by a significant increase in management fees for part open schemes and increasing staff costs as a result of the increase in minimum wage Utility costs have risen for the 5th year in succession from £0.32 per sq ft in 2007 to £0.37 in 2008. Given the volatile state of the energy market in the 2008 calendar we expect future years reporting to show these costs rising Cleaning costs have increased by 10% to £0.86 per sq ft after levelling off in 2007. This increase is not as great as the increase shown in the 2006 report (+15%), however, we believe this to be a direct correlation with the increase of the national minimum wage in October 2007 to £5.52 per hour and the increase in statutory holiday entitlement from 20 to 28 days per annum

Marketing and Promotional expenditure has decreased for the 3rd year in succession both in terms of a rate per square foot and as a percentage of overall expenditure

Security expenditure has increased for the 5th year in a row to an average of £0.90 per sq ft Hard Services expenditure has returned to the 2006 level of £0.86 per sq ft. As familiarity with the RICS cost classes increases the figures in this category should be a true reflection of Hard Services expenditure excluding items of Exceptional Expenditure Insurance costs have increased marginally on last year to £0.05 per sq ft

Exceptional Expenditure costs have increased significantly again after the large increase in 2007. In conjunction with a number of very large items of exceptional expenditure in this year's figures we believe that as owners and their agents become more familiar with the RICS service charge cost classes - expenditure of this kind is being stripped out of previous categories. The average age and dominant type of scheme in the sample (Large Enclosed Air Conditioned) also mean that as aging plant becomes obsolete large exceptional items of expenditure are inevitable