NEWS from Britain's high streets and shopping malls is starting to get better. Official statistics suggest retail spending is on the increase. The latest monthly figures from the Investment Property Databank show retail rents are on average 1.5 per cent higher than a year ago.

At first glance this should be a profound relief to the investment institutions and property companies which poured money into retail property in the early 1990s.

The truth is more complex. The aggregate figures hide a wide variety of performance between retailers and retail locations. Marks and Spencer accompanied its recent results with comments that the consumer was "coming out of the trenches". Yet Burton Group remarked that the retail sector was "not particularly robust".

These comments may simply reflect different tactics in managing the expectations of the City. The contrast between the performance of different retail locations is indisputable.

Capital Shopping Centres said the value of its large shopping centres increased by 12.8 per cent during 1995, because they are attracting more shoppers. The company estimates its centres generated a 9 per cent increase in retail sales during the year, against a national average of about 4 per cent. The implication is that high street shops in secondary locations are being squeezed.

Changing fashions in retailing are part of the explanation. Big stores groups are increasingly fussy about the location and quality of shop units they are prepared to lease. Big units in accessible locations, which allow retailers to roll out new, large-scale trading formats, are in demand and easy to let.

"Retailers want the cream and they are prepared to pay for it," said Mr John Whalley of AMP Asset Management.

In contrast, there is a growing surplus of vacant shop units which are regarded by large groups as too small or in the wrong location.

Companies ranging from Sketchley, the dry cleaners, to National Westminster Bank have this year announced rationalisation of their high street retail networks. This contrast between the best and the rest helps explain why aggregate measures show that retail property yields have been on a rising trend for the past 18 months.

Hillier Parker, the chartered surveyors, estimates the average high street shop is now valued on a yield of 6.7 per cent, up from a low of 5.9 per cent in summer 1994. The latest figures from IPD show a similar pattern, with retail yields moving out fractionally during April.

The truth is probably that yields are falling - and values rising - for prime, out-of-town investments such as shopping centres and retail warehouse parks. Yet the bulk of high street units is suffering.

Anecdotal evidence certainly supports this view. A consortium of institutional investors this week acquired Fort Retail Park, the retail warehouse scheme outside Birmingham being developed by Don and Ron Richardson, the Black Country entrepreneurs.

The Fort is exactly the kind of development favoured by large stores groups. The Richardson's have provided retailers with large units in an accessible location, close to the M6 motorway, with plenty of car-parking. They also have a planning consent which allows them to attract any retailers, not just the purveyors of bulky goods such as carpets which once dominated retail warehousing.

The buyers - Clerical Medical, AMP Asset Management, and British Airways Pension fund - paid £90 million sterling for the scheme, an initial yield of just 5.5 per cent. This sets a record low yield for a retail warehouse scheme.

Similarly, a nine-acre site next to Fosse Park, near Leicester, one of the UK's most successful retail warehouse parks, was recently sold to Castlemore Securities for £24 million. The price, equivalent to £2.6 million an acre, only makes sense if retailers are willing to pay premium rents for the large units planned for the site.

One justification for the headlong rush into retail property seen in the early 1990s was that shops are less vulnerable to changing fashions than offices, which quickly go out of date as technology and working practices are introduced.

If current trends continue though, this line of argument could turn out to be wrong on a grand scale. Some established retail locations are in danger of being replaced by out-of-town alternatives. Even where established high streets are flourishing, units which are too small to accommodate the new trading formats favoured by retailers will miss out on the best of the rental growth.

The two-tier market which has long been a feature of the office market is starting to establish itself in the retail sphere. The penalty for being in the bottom tier will be severe, even if consumers are, indeed, coming out of the trenches.