Letting agents have slashed the annual rent of empty shop units by more than a third in a bid to fill vacant spaces.

Reductions for Gallowtree Gate, in Leicester, are due to the recession, but also because the Highcross shopping centre had shifted the focus of the city centre away from the street.

The move has been welcomed by business leaders, who said it would attract firms to the city.

For many years, Gallowtree Gate was the prime retail location in Leicester.

Agents said there were now so many empty shops they were having to reduce rents to be competitive.

Six stores are empty – some due to chains going into administration and others because of branches relocating.

SGP, the agency dealing with the unit which housed Shutopia until last week, has reduced the annual rent from £280,000 to £185,000.

Commercial agency manager Tom Dymond said: "Gallowtree Gate was very much the place to shop, but Highcross has shifted the focus of the city centre.

"It is not the same as it was 10 to 15 years ago. In this market, we have to reduce the rent."

King Sturge is a joint letting agent of the former HSBC Bank site, which has been empty for more than 18 months. The rent for this unit has dropped from £220,000 a year to £135,000 a year.

Paul Faulkner, from the company, said: "The Highcross has decimated Gallowtree Gate. There is a recession and we have to be competitive.

"There are so many empty shops we are all competing against each other."

Martin Herbert, from Lambert Smith Hampton, said: "Renting levels in Gallowtree Gate have gone down 35 to 40 per cent on what they were at its peak 18 months to two years ago. This is particularly because of the Highcross, but also due to the recession.

"There is already evidence that rent reduction is working. Retailers are coming in. There is positive news for Leicester. It is faring better than a lot of cities."

Owners of empty shop units still have to pay business rates and maintenance costs.

The rent reductions have been welcomed by business leaders.

A city centre director is set to be appointed by Leicester City Council to work alongside retailers and help tackle issues such as empty shops.

Patrick Kitterick, the city council's cabinet member for regeneration, said: "I am pleased owners are being more realistic. The decision is as much about the recession. I still believe Highcross has been of immense benefit to the city."

Dermot Breen, chairman of Leicestershire Chamber of Commerce's city centre committee, added: "It is good news that the rent is being reduced. This is very forward thinking by the owners."