Value retailers drive record number of store openings in UK retail parks
According to research from international real estate advisor Savills, 2019 marked a record year for new store openings in the out of town retail market with operators taking advantage of falling rents and increased supply through insolvency activity. The firm also notes that, as we move into unprecedented and challenging times as a result of Covid-19, retail parks are likely to show some degree of resilience, owing to the fact that many supermarkets and other operators on the ‘essential retailers’ list are based on out of town schemes.
The firm reports that last year saw a record 1,012 new stores open across the retail warehousing market, resulting in a net increase of 470 stores once the number of store closures are taken into account. In addition, despite the volume of CVAs (company voluntary administrations), administrations and liquidations within the industry, the vacancy rate within the sector has remained stable at 4.9% in January 2020, compared with 4.7% in January 2019, suggesting that new operators are quickly acquiring stores left vacant by struggling retailers.
Further research from Savills shows that of the stores earmarked for closure as a result of insolvency activity since January 2018, 38% of units have been re-let, 6% have the same occupier and 28% of units are currently under offer, leaving only 28% searching for a new occupier.
Savills goes on to note that new store openings within UK retail parks are being driven by the value sector, with value retailers accounting for 42% of all new openings last year. Collectively, Aldi, Lidl, B&M, Iceland, Home Bargains and The Range accounted for over a fifth (21%) of all new out of town store openings, and 44% of space by sq ft overall. Furthermore, acquisitions are continuing into 2020, with a further a 251 stores opening in the market in Q1, again driven by value retailers.
Dominic Rodbourne, head of out of town retail, comments: “2019 was a resilient year for the out of town market, with value and discount retailers driving store openings. While 2020 initially started out along a similar path with good levels of take-up, we have now entered an unprecedented and uncertain time in the industry which will inevitably have an impact on the year ahead. However recent changes to business rates will offer a degree of relief to all retailers and we hope that the market will be able return to some form of normality in the latter half.”
Sam Arrowsmith, associate director in the Savills research team, adds: “Despite the volume of CVAs and administrations last year, it’s positive to see that vacancy rates have remained steady through to January 2020. It is difficult to predict where this year will head, but with many retail parks being home to a supermarket, this will help maintain a level of footfall in what is inevitably very turbulent times.”