April 17, 2014
Vacancy rates for retail warehouse space in the UK have dropped to 8.8%, the largest annual reduction since 2010, according to a new report by leading retail property research consultancy, Trevor Wood Associates.
The firm’s Definitive Guide to Retail & Leisure Parks, which reviews the out of town sector’s annual performance, reports that at the end of 2013 levels of empty space at both free standing retail warehouse units and retail parks were at their lowest since 2007. At the end of 2012, in contrast, vacancy rates had risen to 9.9% from 9.2% the previous year.
A major factor in the turnaround has been demand from comparison goods retailers, which at the end of 2013, occupied 53.2% of retail warehouse space (excluding DIY), up from 51.5% the previous year. Almost 3 million sq ft was taken during the year by just eight retailers: B & M, Dunelm, Home Bargains, Next, Pets at Home, Poundstretcher, TK Maxx and Wren Living.
At the end of 2013, the total retail warehouse floor space in the UK amounted to 179.9 million sq ft, up slightly on 178.7 million sq ft the previous year. According to the report, the overall supply has grown by less than 3% over the past three years.
With little development taking place, the ‘second hand’ market has continued to be an important supply of accommodation for expanding retailers, with particular demand for good quality open A1 consent or bulky goods units. A significant proportion of the retail warehouse space vacated over recent years by failed retailers has been successfully re-let, with a sizeable number of units currently under offer.
According to Trevor Wood Associates, the result has been a sharp fall in the supply of second hand space, from 17.1 million sq ft at the end of 2012 to 15.3 million sq ft in the last quarter of 2013. The availability of newly built vacant space meanwhile, remained relatively unchanged at 0.6 million sq ft in the last quarter of 2013, a marginal reduction on 0.66 million sq ft the previous year.
Regionally, the highest retail warehouse vacancy rates were recorded in Scotland (13.9%), followed by Northern Ireland (12.8%), with Scotland experiencing a 2% rise on the previous year. East Anglia and the East Midlands saw the largest reduction in vacancy rates, falling to 5.6%, from 8.2% and 8.3% respectively, the year before.
According to the report, B & Q remains by far the largest non-food retail park tenant, followed by Homebase and Currys, with the number of retailers with in excess of two million sq ft of retail park floor space, rising from ten to thirteen. Regionally, the top ten tenants vary, with B & M appearing in the rankings for both Yorkshire & Humberside and the North, but not nationally. A similar situation exists with The Range in East Anglia and with Marks & Spencer, which is listed in the top ten in both Northern Ireland and the South West, but not across the UK.
Commenting on the research, Trevor Wood said: “During 2013, the combined impact of retail failures and downsizing potentially increased the amount of retail warehouse accommodation available in the UK by more than two million sq ft. However, the take up by a number of expanding comparison goods and variety retailers has helped significantly reduce the amount of space available, and we anticipate further reductions in vacancy rates during the course of this year.”