Out of Town Retail Sector Overview

Executive Summary

Economic Context

  • GDP flat in 2012, however, recovery forecast for 2013 and 2-3% annual growth by 2015.
  • Despite low interest rates (0.5% since Q1 2009), the number of mortgage approvals are still less than half that seen in 2007.
  • Inflation has dropped significantly during 2012 and is now in line with the Bank of England target rate.
  • UK unemployment (8%) has remained consistently lower than the Eurozone average.
  • The retail sector is the third largest employer by industry sector, behind that of business services and the health service.

Retail Trends

  • Out of town retail sales growth has historically been, and continues to be, higher than the equivalent in town centres.
  • The proportion of retail spending on bulky goods will continue to grow year-on-year going forward.
  • Shopping centre completions continue to be centred around town centres as opposed to out of town locations.
  • Smaller units in town reduced between 2003 and 2009.
  • Out of town units between 2,000 and 50,000 sq ft grew between the same period.
  • Compared to in town retail, out of town sales densities are higher.
  • Vacancy rates are lower out of town versus in town location.
  • The retail pipeline is showing signs of recovery.
  • The value of retail warehousing grew by £4.7 billion between 2009 and 2011 – the highest amongst any asset class.

Out Of Town Sector

  • Bluewater remains the top out of town mall in the UK, followed by both London based Westfield schemes. Fosse Park is the top retail park.
  • Out of town retail now accounts for 25% of total floorspace.
  • From a spend density perspective, new space requirements are highest in Greater London, East Anglia and the South West.
  • Out of town retail growth has been driven by grocery demand.
  • The sector must adapt to changing consumer demands such as the ability to ‘click and collect’ as well as coping with retail casualties such as Comet.