April 14, 2020
Retail warehousing vacancy rates in the UK continue to rise and reached 7.6% at the end of 2019 according to latest research by Trevor Wood Associates.
The full impact of Covid-19 on the retail industry is yet to be seen and these latest findings do not take into account end of Q1 2020 casualties, however there are some positives to take from the latest ‘Definitive Guide to Retail and Leisure Parks’ review.
Liz Williamson of Trevor Wood Associates commented: “During the past year, with little development taking place, second-hand supply has helped the growth of a few dynamic retailers. Further administrations and CVAs such as Mamas & Papas, Mothercare, Office Outlet and Thomas Cook, as well as declining confidence among some retailers, led to a further increase in available space. However, with few new developments, a significant amount of this space was occupied by expanding retailers.”
At the end of 2017, the vacancy rate had dropped to 4.9%, risen to 7.5% by the end of 2018, but by the middle of 2019, had slipped back to 7.4%. Disposals, relocations and downsizing by retailers such as Argos, Carpetright, Homebase and Next, plus CVAs, meant that available space at the end of 2019 had risen to over 3 million sq ft.
Liz continued: “There is continued demand for good quality units and a significant proportion of retail warehouse space vacated over the years by failed retailers, has been successfully re-let, while a sizeable number of units are under offer. New entrants such as Shoezone and Superdrug have helped to stabilise the market over the past few years.”
Middlebrook Retail Park in Bolton continues to be ranked the number 1 retail park in the UK, with Castlepoint in Bournemouth and Clifton Moor Centre in York, coming in at 2nd and 3rd place. Westwood Road in Broadstairs is ranked as the number 1 retail warehouse cluster and The O2 Entertainment District in Greenwich is ranked the number 1 leisure scheme.
B & Q, with 7.1 million sq ft, is still by far the largest non-food Retail Park tenant. The largest decrease in space was recorded by Mothercare, while Homebase continues to shed units. Superdrug significantly increased their floorspace this year and broke into the top 50. The total retail warehousing market grew marginally to 195.66 million sq ft in 2019.
Savills is the leading retail warehousing letting agent for the first time, knocking Avison Young off the top spot, with instructions totalling over 27.5 million sq ft. Curson Sowerby Partners has moved up to third place, replacing Morgan Williams, who are now fourth. Top managing agent is also Savills, with JLL and Workman in second and third place respectively.
Trevor Wood Associates’ research identified 1,696 established schemes that are trading or under construction. These include 101 Leisure Parks, 143 Leisure schemes, 946 Retail Parks, 123 Shopping Parks, 43 Retail and Leisure Parks and 303 Retail Warehousing developments.
Liz Williamson adds, “There continues to be a wide variation in peak rents achieved on Retail Parks, from £8 to £105 per sq ft, with a majority recording rents below £22.50. Considering market conditions, four key reviews and new lettings in the past two years, have meant there were minimal changes in the top 100 this year. 12% of Retail Parks have peak rents above £35 per sq ft. However, 35% of the historic peak rents, were set by occupiers who subsequently went into administration or entered into a CVA – some are still trading, some have gone forever. 56% of Retail Warehousing developments recorded rents below £15, with rents ranging from £4-52 per sq ft. Fosse Shopping Park in Leicester remains top of the table in terms of highest rent per sq ft.”
Aberdeen Standard Investments is still the leading investment manager of Retail Parks in the UK, for the third year running, while British Land remain second. Tristan Capital Partners rose three places to 6th place following extensions to four of their schemes, while Nuveen Real Estate and CBRE Global Investors also moved up within the top 10. British Land remains the number 1 direct property owner for both Retail Parks and Retail Warehousing.
Liz added: “It is interesting to note that despite a challenging few years, 44% of schemes built out in the last decade have opened since 2017. This includes schemes such as Northumberland Retail Park in North Shields and Bicester Shopping Park, both completed in 2019. Those driven by a leisure offer accounted for 26% of the schemes built out in the last decade.”
To meet growing demand for the research, Trevor Wood Associates is launching an online Definitive Guide platform later this year, to complement its reviews and run alongside its existing database products.