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dTZ | In Situ
17
In addition to those looking to aquire new stores, retailers are
also constantly reviewing their retail operations whether this be
their existing real estate, stock control or supply infrastructures.
As with any economic downturn, capital is in short supply and
as such many retailers will look to make do with their existing
estates and to ‘sweat’ those assets rather than seek to increase
store numbers. This is often highlighted by an uptake in lease re-
gears, reversionary leases and store refurbishments — something
that many retailers have focused on over recent years. That said,
retailers are also negotiating harder when looking to acquire
new space and in certain circumstances it is proving possible to
secure new premises at a lower rent than was previously seen on
the building — and with a significant capital contribution as part
of the deal.
A commentary on retailing would not be complete without
reference to ‘multi’ or ‘omni’ channel retailing. There is no doubt
that web sales have shown significant growth in recent times and
there is little sign of this slowing. In 2011, online sales in the uK
were estimated at 8% of all retail sales — a total of approximately
£70 billion. What has perhaps proved more surprising is that
the phenomena is not sector specific with people buying
music, groceries and fashion online. The growth in online sales
seems set to continue (10 december 2012 was reputed to have
been the largest ever single day of online sales in the uK with
approximately 1 million purchases made) and recent research
estimates that by 2020, online retail turnover could be as high
as 25% of total retail sales. If that proves to be the case, it is not
difficult to envisage the potential effect it will have on high street
sales and takings at the actual tills.
The high street has entered a period of rapid change and the
cyclical nature of this has to an extent been altered by this
growth of online sales which has brought a new variable to the
equation. Add to this the statistic that suggests approximately
50% of all uK retail leases are expiring between the four year
period from January 2012 and december 2015, and you have a
major impact on the high street.
What also warrants analysis when looking at the state of the
uK retail market are the marked differences in tenant demand,
voids, and consumer spending potential from region to region.
There is no doubt that central London and many pockets inside
the m25 and throughout the south east have weathered the
economic storm well, and trading levels have held up – but that
needs contrasting with many towns and cities elsewhere in the
uK where major problems exist in the local economies, and this
will have a huge impact on these retail centres.
2012 was a hugely challenging year for many retail occupiers,
and we believe 2013 is presenting similarly tough conditions.
‘Location, location, location’ is set to remain a key phrase and
the right location in the right conurbation at the right rental level
will still provide the occupier with a base to trade profitably from,
and as such will remain attractive to potential investors looking
for future growth.
Alex mouNtfoRd
Associate director, Retail
+44 (0)20 3296 4174
Approximately
11% of the uk’s retail
stock is now vacant,
in excess of 25 million
square feet of space
