WAREHOUSINGOctober 2012

The development pipeline for out-of-town retail parkspXVIII

The rise and fall of retail rental levelspXII

Retailers promote their multichannel credentialspV

VALUE HEADSOUT OF TOWN

PROPERTY

Value retailers change focus from the high street to big-box schemes

WAREHOUSINGOctober 2012

PROPERTY

Helping brands grow tHeir retail businessDebenhams’ first new format store on a shopping park now open in Chesterfield

www.landsecuritiesretail.com

S04006 Debenhams Ad LS A4 to size v2.indd 1 4/10/12 16:26:44

October 2012 Retail Week III www.retail-week.com

WAREHOUSING

Out-of-town retailing is in the throes of signifi cant change. Its role in a multichannel environment is yet to be fully determined, and the recession is

taking its toll just as much as it is elsewhere in the market.This means out-of-town parks must evolve in response.

Change will be fairly comprehensive, although it certainly isn’t happening overnight, and the differences are starting

to trickle through. Warehouse stores look as though they will come into their own with the continuing growth of click-and-collect, for instance – customers like their convenient locations and free parking, and retailers including Marks & Spencer are responding with new store technology designed to make the process smooth (page V).

Changing shopping habits are not the only challenge. The longest peacetime slump for a century was never going to leave out-of-town retail unscathed, and the changing mix of retailers in schemes refl ects consumers’ growing love of value. Value players such as Poundworld, Wilkinson and 99p Stores have all got in on the act, opening stores on parks where a couple of years ago their fascias might have been less welcome (page VII).

Landlords are also having to be more creative in renting out hard-to-fi ll units, some of which have been stood empty since former out-of-town stalwarts such as Focus DIY went bust (page XV).

It’s a challenging period for the retail industry, but while the pipeline of new out-of-town developments has slowed, the situation is still not as bleak as it is for some of the UK’s underperforming high streets (page XVIII). In many ways, customers still respond well to the convenience and ease of out-of-town shopping but, with the economic situation so fl at, park landlords and retailers must work harder than ever to win spend.

Changing the retail mix

Rebecca Thomson, Supplement Editor

CONTENTS

WAREHOUSING SUPPLEMENT

Supplement Editor Rebecca Thomson 020 7728 5670ContributorsColette Fahy, Gemma Goldfi ngle, Tiffany Holland, James Knowles, Alex LawsonSupplements Production EditorTracey Gardner 020 7728 4129Art EditorJon Hart 020 7728 3519

Production ManagerPaddy Orchard 020 7728 4111Display Account ManagerJennifer Saunders 020 7728 3849Commercial DirectorMandy Cluskey 020 7728 3586Managing Director, RetailTracey Davies 020 7728 3567

Multichannel pVRetailers are using warehouses to promote their digital innovation

Rents pXIIAre retail rents likely to rise or fall in the future?

Empty units pXVAfter a raft of administrations, landlords are fi nding it hard to re-let big box units

Value shift pVIIWhy value retailers are now moving out of town

Development pXVIIIWhy retailers are focusing on the pipeline of out-of-town retail parks

Helping brands grow tHeir retail businessDebenhams’ first new format store on a shopping park now open in Chesterfield

www.landsecuritiesretail.com

S04006 Debenhams Ad LS A4 to size v2.indd 1 4/10/12 16:26:44

October 2012 Retail Week III www.retail-week.com

WAREHOUSING

Out-of-town retailing is in the throes of signifi cant change. Its role in a multichannel environment is yet to be fully determined, and the recession is

taking its toll just as much as it is elsewhere in the market.This means out-of-town parks must evolve in response.

Change will be fairly comprehensive, although it certainly isn’t happening overnight, and the differences are starting

to trickle through. Warehouse stores look as though they will come into their own with the continuing growth of click-and-collect, for instance – customers like their convenient locations and free parking, and retailers including Marks & Spencer are responding with new store technology designed to make the process smooth (page V).

Changing shopping habits are not the only challenge. The longest peacetime slump for a century was never going to leave out-of-town retail unscathed, and the changing mix of retailers in schemes refl ects consumers’ growing love of value. Value players such as Poundworld, Wilkinson and 99p Stores have all got in on the act, opening stores on parks where a couple of years ago their fascias might have been less welcome (page VII).

Landlords are also having to be more creative in renting out hard-to-fi ll units, some of which have been stood empty since former out-of-town stalwarts such as Focus DIY went bust (page XV).

It’s a challenging period for the retail industry, but while the pipeline of new out-of-town developments has slowed, the situation is still not as bleak as it is for some of the UK’s underperforming high streets (page XVIII). In many ways, customers still respond well to the convenience and ease of out-of-town shopping but, with the economic situation so fl at, park landlords and retailers must work harder than ever to win spend.

Changing the retail mix

Rebecca Thomson, Supplement Editor

CONTENTS

WAREHOUSING SUPPLEMENT

Supplement Editor Rebecca Thomson 020 7728 5670ContributorsColette Fahy, Gemma Goldfi ngle, Tiffany Holland, James Knowles, Alex LawsonSupplements Production EditorTracey Gardner 020 7728 4129Art EditorJon Hart 020 7728 3519

Production ManagerPaddy Orchard 020 7728 4111Display Account ManagerJennifer Saunders 020 7728 3849Commercial DirectorMandy Cluskey 020 7728 3586Managing Director, RetailTracey Davies 020 7728 3567

Multichannel pVRetailers are using warehouses to promote their digital innovation

Rents pXIIAre retail rents likely to rise or fall in the future?

Empty units pXVAfter a raft of administrations, landlords are fi nding it hard to re-let big box units

Value shift pVIIWhy value retailers are now moving out of town

Development pXVIIIWhy retailers are focusing on the pipeline of out-of-town retail parks

BRITAIN’S NEW PORT OPENING Q4

2013

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•Located in the UK’s largest consumer market

•Integrated with Britain’s new hub port

•Exceptional sea, road and rail connectivity

•Increased speed to market at reduced cost

•Plots ready for build to suit development

Don’t miss out optimising your global supply chain, speak to us today…

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Tim Johnson tim.johnson@eu.jll.com 0207 087 5300

Richard Evans richard.evans@eu.jll.com 0207 399 5223

Chris Knight chris.c.knight@eu.jll.com 0207 399 5402

Jeremy Cracknell jeremy.cracknell@dpworld.com 01375 648305

Peter Mitchell peter.mitchell@dpworld.com 01375 648357

Peter Ward peter.ward@dpworld.com 01375 648342

020 7493 4933

Warehousingmultichannel

in August, Marks & Spencer unveiled its new flagship, mul-tichannel, out-of-town store in Cheshire Oaks.

The store, described by M&S director of retail Steve Rowe as “the future of retail”, has a host of digital innovations such as click-and-collect areas and separate browse-and-order points where shoppers can select items not stocked in store. It also offers virtual makeovers via a touchscreen in its overhauled beauty department.

Although some of the store’s elements can be integrated into the rest of M&S’s store portfolio, out-of-town locations are popular choices for showcasing mul-tichannel innovations, and it’s perhaps unsurprising that one was chosen as the prototype for the multichannel model.

“They are accessible and there’s greater flexibility to create a multichan-nel experience,” says Dominic Walton, senior director at property agency CBRE. “There is more space to allow for compu-ter terminals and click-and-collect areas.

Although many of the store’s elements could work in the retailer’s smaller stores, its 151,000 sq ft creates a better, all-encompassing experience.

M&S is not the only retailer to have used out-of-town locations to trial mul-

and, in some cases, the technology can introduce customers to a new way of shopping with a retailer. The cost of the tablets, however, is comparatively low.

One retailer that has benefited from its multichannel approach is department store John Lewis. Online sales accounted for 24% of total sales at its half year end-ing July 28, and click-and-collect sales grew by 114% year on year.

Click-and-collect services are an easy way to bring big box stores into the mul-tichannel environment, because out-of-town stores can act as useful collection points for online orders as they are easy to access for many customers.

Click-and-collect is an important addi-tion to a bricks-and-mortar retailer’s armoury as it helps in the battle against online powerhouses such as Amazon. The fulfilment method gives customers the flexibility to pick up their online pur-chases at a time convenient to them, rather than waiting in the house all day for a delivery.

“The future battleground for remote retail is customer service,” says Hyman. “Service in online retailing is very primi-tive. So far, the monumental growth of online hasn’t called for major investment in fulfilment but it’s needed. People don’t want to stay in and wait for hours, it defeats the purpose of shopping online. Click-and-collect is going to be massive and out-of-town retailing will be used in a major way.”

The accessibility of retail parks, which are generally found close to motorways, not only makes them easy for customers to get to, but for lorries delivering stock too. The larger unit sizes available in out-of-town schemes mean there is also ample room to stock product for collection.

House of Fraser has already launched shops specifically for online collections, while Amazon has collection lockers for customers in convenient locations such as train stations, shopping centres and large offices. Hyman says there are likely to be more pick up points developed spe-cifically in retail parks.

However, he believes the model will adapt, and retailers will eventually share non-branded, out-of-town, click-and-collect units.

“I think we’ll see cross-stocking stores at some of these developments that will take deliveries for multiple retailers. It will act as a collection facility for several different retailers,” he says.

Whether out-of-town developments become conduits solely for click-and-collect remains to be seen, but their accessible locations and ample space means further multichannel experimen-tation is inevitable.

tichannel concepts. Mothercare’s new format store is in the Ravenside Retail Park in Edmonton, London and, along with initiatives such as cafes and ultra-sound baby scanning studios, includes staff carrying iPads. Next launched its first Home and Garden store in Shore-ham-by-Sea, which devotes ample space to online ordering with terminals aplenty in store.

The customer’s choiceA strong multichannel offer is what every retailer strives to provide, as customers now expect a choice about how, when and where they shop.

Deloitte strategic advisor Richard Hyman says: “The starting point is the customer. The market isn’t growing anymore. You have got to reach the cus-tomer however and wherever they are.”

Retailers don’t necessarily need to invest millions to create a multichannel experience. One popular initiative that M&S has adopted at Cheshire Oaks is equipping the store team of customer service assistants with iPads ready to help shoppers with the selection process.

Such initiatives can give consumers a much wider offer – tablets provide access to products not stocked in store –

“There is more space To allow for compuTer Terminals and click-and-collecT areas”Dominic Walton, CBRE

October 2012 retail week V www.retail-week.com

Retailers are using warehouses to promote their multichannel credentials in out-of-town schemes. Gemma Goldfingle reports

Let’s get digital

BRITAIN’S NEW PORT OPENING Q4

2013

9.25 million sq ft available on 560 acre logistics park

•Located in the UK’s largest consumer market

•Integrated with Britain’s new hub port

•Exceptional sea, road and rail connectivity

•Increased speed to market at reduced cost

•Plots ready for build to suit development

Don’t miss out optimising your global supply chain, speak to us today…

Re-draw your global supply chain map...

www.LondonGateway.com

Tim Johnson tim.johnson@eu.jll.com 0207 087 5300

Richard Evans richard.evans@eu.jll.com 0207 399 5223

Chris Knight chris.c.knight@eu.jll.com 0207 399 5402

Jeremy Cracknell jeremy.cracknell@dpworld.com 01375 648305

Peter Mitchell peter.mitchell@dpworld.com 01375 648357

Peter Ward peter.ward@dpworld.com 01375 648342

020 7493 4933

Warehousingmultichannel

in August, Marks & Spencer unveiled its new flagship, mul-tichannel, out-of-town store in Cheshire Oaks.

The store, described by M&S director of retail Steve Rowe as “the future of retail”, has a host of digital innovations such as click-and-collect areas and separate browse-and-order points where shoppers can select items not stocked in store. It also offers virtual makeovers via a touchscreen in its overhauled beauty department.

Although some of the store’s elements can be integrated into the rest of M&S’s store portfolio, out-of-town locations are popular choices for showcasing mul-tichannel innovations, and it’s perhaps unsurprising that one was chosen as the prototype for the multichannel model.

“They are accessible and there’s greater flexibility to create a multichan-nel experience,” says Dominic Walton, senior director at property agency CBRE. “There is more space to allow for compu-ter terminals and click-and-collect areas.

Although many of the store’s elements could work in the retailer’s smaller stores, its 151,000 sq ft creates a better, all-encompassing experience.

M&S is not the only retailer to have used out-of-town locations to trial mul-

and, in some cases, the technology can introduce customers to a new way of shopping with a retailer. The cost of the tablets, however, is comparatively low.

One retailer that has benefited from its multichannel approach is department store John Lewis. Online sales accounted for 24% of total sales at its half year end-ing July 28, and click-and-collect sales grew by 114% year on year.

Click-and-collect services are an easy way to bring big box stores into the mul-tichannel environment, because out-of-town stores can act as useful collection points for online orders as they are easy to access for many customers.

Click-and-collect is an important addi-tion to a bricks-and-mortar retailer’s armoury as it helps in the battle against online powerhouses such as Amazon. The fulfilment method gives customers the flexibility to pick up their online pur-chases at a time convenient to them, rather than waiting in the house all day for a delivery.

“The future battleground for remote retail is customer service,” says Hyman. “Service in online retailing is very primi-tive. So far, the monumental growth of online hasn’t called for major investment in fulfilment but it’s needed. People don’t want to stay in and wait for hours, it defeats the purpose of shopping online. Click-and-collect is going to be massive and out-of-town retailing will be used in a major way.”

The accessibility of retail parks, which are generally found close to motorways, not only makes them easy for customers to get to, but for lorries delivering stock too. The larger unit sizes available in out-of-town schemes mean there is also ample room to stock product for collection.

House of Fraser has already launched shops specifically for online collections, while Amazon has collection lockers for customers in convenient locations such as train stations, shopping centres and large offices. Hyman says there are likely to be more pick up points developed spe-cifically in retail parks.

However, he believes the model will adapt, and retailers will eventually share non-branded, out-of-town, click-and-collect units.

“I think we’ll see cross-stocking stores at some of these developments that will take deliveries for multiple retailers. It will act as a collection facility for several different retailers,” he says.

Whether out-of-town developments become conduits solely for click-and-collect remains to be seen, but their accessible locations and ample space means further multichannel experimen-tation is inevitable.

tichannel concepts. Mothercare’s new format store is in the Ravenside Retail Park in Edmonton, London and, along with initiatives such as cafes and ultra-sound baby scanning studios, includes staff carrying iPads. Next launched its first Home and Garden store in Shore-ham-by-Sea, which devotes ample space to online ordering with terminals aplenty in store.

The customer’s choiceA strong multichannel offer is what every retailer strives to provide, as customers now expect a choice about how, when and where they shop.

Deloitte strategic advisor Richard Hyman says: “The starting point is the customer. The market isn’t growing anymore. You have got to reach the cus-tomer however and wherever they are.”

Retailers don’t necessarily need to invest millions to create a multichannel experience. One popular initiative that M&S has adopted at Cheshire Oaks is equipping the store team of customer service assistants with iPads ready to help shoppers with the selection process.

Such initiatives can give consumers a much wider offer – tablets provide access to products not stocked in store –

“There is more space To allow for compuTer Terminals and click-and-collecT areas”Dominic Walton, CBRE

October 2012 retail week V www.retail-week.com

Retailers are using warehouses to promote their multichannel credentials in out-of-town schemes. Gemma Goldfingle reports

Let’s get digital

APEXLINVAR.CO.UK

Tel 01908 561 222

Email enquiries@apexlinvar.co.uk

www apexlinvar.co.uk

www storagedirect.co.uk

STAND OUT FROM YOUR COMPETITION

Optimise your floorspace, increase your picking rates, reduce deadspace and maximise your stock holding capacity. Our storage solutions add value to your business and help improve your operational efficiency.

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RW 10/12

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WarehousingChanging MiX

the out-of-town retail mix used to be predictable – names such as Carpetright and Halfords would appear regularly, and

many high street retailers would steer clear of big boxes.

But recently, out-of-town retail parks have been undergoing a transformation. Retailers such as DIY chain Focus have been pushed out of the market and customer behaviour has changed dramatically – value retailers such as 99p Stores, B&M Bargains, Poundworld and Wilkinson are now among the main

Johnny Rowland, director of out-of-town retail at property agent Savills, agrees. He says value retailers have helped fi ll the gaps left by retailers hit by recession: “In the last three years discounters have really appeared on the scene. It started off with The Range opening stores, which was driven by the demise of bigger space users such as Courts and Focus.”

B&M Bargains began life on the high street with 2,000 sq ft stores, but has acquired a clutch of Focus stores as large as 26,000 sq ft.

99p Stores and Poundworld, which have both branched out to retail parks with new formats Family Bargains and Discount UK, both offer extended propositions compared with their high street stores.

There is a key difference in costs that also attracts retailers. Rowland explains: “Although landlords could raise rents, there has been no rent review going up since 2007.” Asbury adds that retailers in out-of-town parks can often get more space for a lower cost than on the high street.

Value retailers have boomed during the recession as customers’ attitudes towards them shifted, and are keen to grow their store estate as a result.

Poundworld property director Mark Ward says: “With customers feeling the pinch over the last two years, the desire for them to grab a bargain has increased and there has certainly been a positive shift in people’s views.

“We feel that with a bigger space and the opportunities on retail parks we can offer the customer a greater choice.”

However, the value retailers have had to win over landlords, who before the recession may not have wanted a value proposition on their parks.

“Three to five years ago the land-lords and some tenants might have had a bit of a snooty view of the value retail-ers,” says Asbury.

“But a lot of them have very good covenants and good trading. They actu-ally generate footfall, pulling in cus-tomers as you might expect an anchor trader like B&Q or Next to do. The other retailers are therefore benefi ting.”

Ward agrees, saying that many land-lords are often surprised by the quality of Poundworld shopfi ts and the prod-ucts they sell.

“The biggest improvement landlords see is the signifi cant surge in footfall we generate,” he adds.

Furniture retailer CSL Sofas trades mainly on retail parks but started life on the high street. Managing direc-tor Jason Tyldesley says: “There is a ➤

acquirers of retail park space across the UK.

“Quite a lot of these retailers started life on the high street,” says Rob Asbury, head of retail and leisure at property consultancy Montagu Evans. “They realised with the administrations caused by the reces-sion, particularly with the collapse of Focus last year, there was a lot of property.

“They found it was a quick way to acquire stores and build up locations, so they are certainly leading the way in terms of fi lling space.”

“WiTh a biggeR space We can offeR The cusToMeR a gReaTeR choice”Mark Ward, Poundworld

October 2012 Retail Week VII www.retail-week.com

Value retailers are moving out of town. Tiffany Holland fi nds out why, and looks at the implications as they switch focus from the high street

The changing face of big-box retail

99p Stores has branched out to retail parks by

opening Family Bargains

APEXLINVAR.CO.UK

Tel 01908 561 222

Email enquiries@apexlinvar.co.uk

www apexlinvar.co.uk

www storagedirect.co.uk

STAND OUT FROM YOUR COMPETITION

Optimise your floorspace, increase your picking rates, reduce deadspace and maximise your stock holding capacity. Our storage solutions add value to your business and help improve your operational efficiency.

STORAGE SOLUTIONS THAT ADD VALUE

www.apexlinvar.co.uk

RW 10/12

OUR COST SAVING STORAGE SOLUTIONSHELP GIVE YOU THE EDGE

APEX_advert_concepts_210x297b RW10/12.indd 1 28/09/2012 14:38

WarehousingChanging MiX

the out-of-town retail mix used to be predictable – names such as Carpetright and Halfords would appear regularly, and

many high street retailers would steer clear of big boxes.

But recently, out-of-town retail parks have been undergoing a transformation. Retailers such as DIY chain Focus have been pushed out of the market and customer behaviour has changed dramatically – value retailers such as 99p Stores, B&M Bargains, Poundworld and Wilkinson are now among the main

Johnny Rowland, director of out-of-town retail at property agent Savills, agrees. He says value retailers have helped fi ll the gaps left by retailers hit by recession: “In the last three years discounters have really appeared on the scene. It started off with The Range opening stores, which was driven by the demise of bigger space users such as Courts and Focus.”

B&M Bargains began life on the high street with 2,000 sq ft stores, but has acquired a clutch of Focus stores as large as 26,000 sq ft.

99p Stores and Poundworld, which have both branched out to retail parks with new formats Family Bargains and Discount UK, both offer extended propositions compared with their high street stores.

There is a key difference in costs that also attracts retailers. Rowland explains: “Although landlords could raise rents, there has been no rent review going up since 2007.” Asbury adds that retailers in out-of-town parks can often get more space for a lower cost than on the high street.

Value retailers have boomed during the recession as customers’ attitudes towards them shifted, and are keen to grow their store estate as a result.

Poundworld property director Mark Ward says: “With customers feeling the pinch over the last two years, the desire for them to grab a bargain has increased and there has certainly been a positive shift in people’s views.

“We feel that with a bigger space and the opportunities on retail parks we can offer the customer a greater choice.”

However, the value retailers have had to win over landlords, who before the recession may not have wanted a value proposition on their parks.

“Three to five years ago the land-lords and some tenants might have had a bit of a snooty view of the value retail-ers,” says Asbury.

“But a lot of them have very good covenants and good trading. They actu-ally generate footfall, pulling in cus-tomers as you might expect an anchor trader like B&Q or Next to do. The other retailers are therefore benefi ting.”

Ward agrees, saying that many land-lords are often surprised by the quality of Poundworld shopfi ts and the prod-ucts they sell.

“The biggest improvement landlords see is the signifi cant surge in footfall we generate,” he adds.

Furniture retailer CSL Sofas trades mainly on retail parks but started life on the high street. Managing direc-tor Jason Tyldesley says: “There is a ➤

acquirers of retail park space across the UK.

“Quite a lot of these retailers started life on the high street,” says Rob Asbury, head of retail and leisure at property consultancy Montagu Evans. “They realised with the administrations caused by the reces-sion, particularly with the collapse of Focus last year, there was a lot of property.

“They found it was a quick way to acquire stores and build up locations, so they are certainly leading the way in terms of fi lling space.”

“WiTh a biggeR space We can offeR The cusToMeR a gReaTeR choice”Mark Ward, Poundworld

October 2012 Retail Week VII www.retail-week.com

Value retailers are moving out of town. Tiffany Holland fi nds out why, and looks at the implications as they switch focus from the high street

The changing face of big-box retail

99p Stores has branched out to retail parks by

opening Family Bargains

WarehousingChanging MiX

➤

VIII Retail Week October 2012 www.retail-week.com

“TheRe’s a baRRieR To enTRy on ouT-of-ToWn ReTail paRks if you’Re noT a Well-knoWn ReTaileR, buT aTTiTudes aRe changing”Jason Tyldesley, CSL Sofas

It’s not just value retailers that are seeking out-of-town space. Retailers such as Next are keen to expand in the right locations

massive barrier to entry on out-of- town retail parks if you’re not a well-known retailer, but landlords’ attitudes are changing.

“These days you have to have a huge covenant or locate in a retail park that isn’t as prime as you wanted. It has taken us many years and a lot of effort to become a preferred store on out-of-town locations and now we get purpose-built units instead of taking any space we’re offered.”

But, he says, CSL “actively avoids” retail parks that include value retailers . “Great value isn’t a bad thing but if it changes the type of clientele shopping

on the site it’s not great for a high-ticket retailer like us.”

Neil Varnham, fund director at retail property fund management firm Pradera, says the perfect retail park mix should include a leisure offer in the form of a cinema and a coffee shop and some big-name retailers such as Boots, alongside a value presence. “But the key is not to have too many discounters,” he adds.

Demand for retail park space is not just coming from the discounters. Fash-ion and home retailer Next, Boots and sports retailers are still acquiring out-of-town locations, where bigger stores tend

to generate higher turnover and retailers can offer customers extended ranges and exclusive products.

A Next spokesman says it wants to open larger stores on retail parks that have a DIY and gardening offer, comple-menting its in-town stores.

“The ease of access and extended trading hours attract customers to out-of-town locations and the size of unit available has created a develop-ment opportunity and allowed Next to open fantastic new stores such as the one in Ipswich Martlesham Heath,” he says.

“Evidence would suggest that the home customer tends to look out of town rather than in town when wanting to make a significant purchase. Next has increased the number of Home stan-dalone stores to meet this demand.”

There are likely to be more shifts to out-of-town locations, and Asbury believes discounters are here to stay. However, he cautions: “A lot of the discounters sell the same products and that cannot be sustained for too long. But people’s shopping habits have changed and will change, so it is going to be very interesting.”

And the growth of online shopping has led many retailers to realise they do not need to operate as much physical trading space as they once did. Varnham says: “If we go back 20 years, retailers used to think they needed 250 locations across the UK to get good coverage. Now, 80 stores are enough.”

As shopping habits change, so will retailers’ requirements – out-of-town stores will become a core part of a grow-ing number of retailers’ businesses.

High streets have been hit hard by the recession, and the current vacancy rate at a record 14.6%. But retailers are committed to such locations. Poundworld property director Mark Ward says since January this year the retailer has opened 44 stores and 80% were on high streets.

But Marks & Spencer director of property Clem Constantine says retailers will go where the location is right.

“The high street needs investment. If a town centre is allowed to die, it doesn’t help us with our decision about where to locate a store,” he comments.

M&S aims to increase space between 2% and 5% by 2015 and is looking in and out of town. Although M&S has just 25 stores located out of town out of more than 700

stores in total, it recently opened its Cheshire Oaks big box store to test its multichannel vision.

Constantine believes town centres are struggling to rejuvenate themselves, which could push customers to

travel out of town. “People want to go where

it is easy to shop, which includes easy parking, well-lit areas and a leisure offering, but if the high street doesn’t have that then they will travel further out.”

CSL managing director Jason Tyldesley believes high streets and retail parks should complement

each other rather than seeing them as rival retail locations.

“The perception is that retail parks are dangerous,” he says. “But the locations need to be integrated.”

out of toWn vs high street

Poundworld continues to open high street stores

specialists in retail planning

Quod l Ingeni Building 17 Broadwick Street London W1F 0AX l 020 3597 1000 l www.quod.com

For specialist out of centre retail planning and asset management advice please contact; Tim Rainbird at tim.rainbird@quod.com or Ben Ford at ben.ford@quod.com

C

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WarehousingChanging MiX

➤

VIII Retail Week October 2012 www.retail-week.com

“TheRe’s a baRRieR To enTRy on ouT-of-ToWn ReTail paRks if you’Re noT a Well-knoWn ReTaileR, buT aTTiTudes aRe changing”Jason Tyldesley, CSL Sofas

It’s not just value retailers that are seeking out-of-town space. Retailers such as Next are keen to expand in the right locations

massive barrier to entry on out-of- town retail parks if you’re not a well-known retailer, but landlords’ attitudes are changing.

“These days you have to have a huge covenant or locate in a retail park that isn’t as prime as you wanted. It has taken us many years and a lot of effort to become a preferred store on out-of-town locations and now we get purpose-built units instead of taking any space we’re offered.”

But, he says, CSL “actively avoids” retail parks that include value retailers . “Great value isn’t a bad thing but if it changes the type of clientele shopping

on the site it’s not great for a high-ticket retailer like us.”

Neil Varnham, fund director at retail property fund management firm Pradera, says the perfect retail park mix should include a leisure offer in the form of a cinema and a coffee shop and some big-name retailers such as Boots, alongside a value presence. “But the key is not to have too many discounters,” he adds.

Demand for retail park space is not just coming from the discounters. Fash-ion and home retailer Next, Boots and sports retailers are still acquiring out-of-town locations, where bigger stores tend

to generate higher turnover and retailers can offer customers extended ranges and exclusive products.

A Next spokesman says it wants to open larger stores on retail parks that have a DIY and gardening offer, comple-menting its in-town stores.

“The ease of access and extended trading hours attract customers to out-of-town locations and the size of unit available has created a develop-ment opportunity and allowed Next to open fantastic new stores such as the one in Ipswich Martlesham Heath,” he says.

“Evidence would suggest that the home customer tends to look out of town rather than in town when wanting to make a significant purchase. Next has increased the number of Home stan-dalone stores to meet this demand.”

There are likely to be more shifts to out-of-town locations, and Asbury believes discounters are here to stay. However, he cautions: “A lot of the discounters sell the same products and that cannot be sustained for too long. But people’s shopping habits have changed and will change, so it is going to be very interesting.”

And the growth of online shopping has led many retailers to realise they do not need to operate as much physical trading space as they once did. Varnham says: “If we go back 20 years, retailers used to think they needed 250 locations across the UK to get good coverage. Now, 80 stores are enough.”

As shopping habits change, so will retailers’ requirements – out-of-town stores will become a core part of a grow-ing number of retailers’ businesses.

High streets have been hit hard by the recession, and the current vacancy rate at a record 14.6%. But retailers are committed to such locations. Poundworld property director Mark Ward says since January this year the retailer has opened 44 stores and 80% were on high streets.

But Marks & Spencer director of property Clem Constantine says retailers will go where the location is right.

“The high street needs investment. If a town centre is allowed to die, it doesn’t help us with our decision about where to locate a store,” he comments.

M&S aims to increase space between 2% and 5% by 2015 and is looking in and out of town. Although M&S has just 25 stores located out of town out of more than 700

stores in total, it recently opened its Cheshire Oaks big box store to test its multichannel vision.

Constantine believes town centres are struggling to rejuvenate themselves, which could push customers to

travel out of town. “People want to go where

it is easy to shop, which includes easy parking, well-lit areas and a leisure offering, but if the high street doesn’t have that then they will travel further out.”

CSL managing director Jason Tyldesley believes high streets and retail parks should complement

each other rather than seeing them as rival retail locations.

“The perception is that retail parks are dangerous,” he says. “But the locations need to be integrated.”

out of toWn vs high street

Poundworld continues to open high street stores

specialists in retail planning

Quod l Ingeni Building 17 Broadwick Street London W1F 0AX l 020 3597 1000 l www.quod.com

For specialist out of centre retail planning and asset management advice please contact; Tim Rainbird at tim.rainbird@quod.com or Ben Ford at ben.ford@quod.com

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For more information please phone 0844 662 6600 or email

Dominic Millar dm@completelygroup.com // Mathew O’Halloran mo@completelygroup.com

marketing

The UK’s leading property marketing

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advertising

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street availability.

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CG_RW_BCSC12_AD_v4.indd 1 27/09/2012 15:10:14

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To become a Tenens’ tenant call Simon Emms,Estates Manager, on 08702 415640

visit us at www.tenens.com or email us at property@tenens.com

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The space is flexible and scalable, perfect for expanding businesses or those with seasonal peaks andtroughs and, since we have complete control over our own costs, our rates are highly competitive.

www.completelygroup.com

For more information please phone 0844 662 6600 or email

Dominic Millar dm@completelygroup.com // Mathew O’Halloran mo@completelygroup.com

marketing

The UK’s leading property marketing

agency with 12 years specialising in

retail. Innovative products from an

experienced team.

advertising

The UK’s leading retail property

database. Property information and

leasing contacts for ALL shopping

centres and retail parks, plus high

street availability.

www.completelyretail.co.uk

events

Leasing focused retail property events

at London’s Old Spitalfields Market.

Stands Delegates

30th April 2013 sold out Book noW

17th Sept 2013 Book noW Book noW

www.crmarketplace.co.uk

RetailMarketplaceLONDON 2013

c   mpletely changing the way y   u do Business

CG_RW_BCSC12_AD_v4.indd 1 27/09/2012 15:10:14

Outgrowing your warehousing?

To become a Tenens’ tenant call Simon Emms,Estates Manager, on 08702 415640

visit us at www.tenens.com or email us at property@tenens.com

Howard Tenens Associates Ltd, Kingfisher Business Park, London Road, Thrupp, Stroud, Gloucestershire GL5 2BY.

Maybe it’s time to become a Tenens’ tenant.Because we own 3,000,000 ft2 (278,700m2) of high quality storage space across the UK, you’ll find Howard Tenens can always offer you a tailored solution in your ideal location.

l Warehouses available from 5,000 ft2 (465m2) up to over 200,000 ft2 (18,580m2).

l Locations include Andover, Ashby de la Zouch, Boston, Felixstowe, Sharpness, South Ockendon and Swindon.

l Excellent transport links to all UK delivery points and beyond.

l Modern warehouse facilities in a contemporary business environment.

The space is flexible and scalable, perfect for expanding businesses or those with seasonal peaks andtroughs and, since we have complete control over our own costs, our rates are highly competitive.

WarehousingrenTs

XII Retail Week October 2012 www.retail-week.com

While out-of-town retail parks have a reputation for higher rents than the high street, prices have

remained fairly flat of late. According to The Definitive Guide to

Retail & Leisure Parks 2012, published by Trevor Wood Associates, the highest level of rent paid at the top 10 retail parks has not changed throughout the year.

The out-of-town scheme with the highest rental value is the 416,536 sq ft Fosse Park in Leicester, which achieved a £105 per sq ft headline rent on a letting to footwear retailer Clarks made in 2008.

“The top rents on the best retail parks have not radically changed in the past four to five years,” says CBRE senior director Dominic Walton. “There’s pres-sure on rents but the very best parks are relatively resilient.”

The downturn has caused prime loca-tions to thrive while the problems of struggling developments have been exacerbated. He says rental rates on most parks have dropped between 10% and 40% from their 2006 peak and that retailers judge out-of-town parks on three major criteria: location, whether it has critical mass and what type of plan-ning consent it has.

From a planning perspective, certain allowances will make a development more attractive to retailers. “If planning allows retailers to build mezzanines, that can boost rental rates. Trading den-sity is commensurate with higher rents,” Walton explains.

to Trevor Wood Associates director Trevor Wood: “They’ve been some of the most aggressive takers of space and have been in competition with each other.”

Although the rental market out of town has remained flat over the past year, Walton believes the locations are well placed to benefit when the econ-omy picks up. Some retailers such as Next class out of town as integral to store expansion after being wooed by the accessibility of developments. Plus, the lack of development in town centres make retail parks well-positioned to profit post-downturn.

Town centre development has stalled with only one development, Trinity Leeds, expected to open next year. That is likely to lead to more retailers moving out of town.

Walton says: “You can rapidly build stores out of town, which can be online in less than a year, while you’re looking at two years for in town. When the econ-omy and market dynamics improve there is an opportunity for rental growth, but it will be a long time before we hit the peaks of 2006.”

The lack of development is also encouraging what Walton calls “more interesting retailers,” such as John Lewis and Debenhams, to expand their out-of-town portfolios.

Clarks, Office and River Island are relatively new to the market and, according to Walton, Primark is to open its first retail park stores after signing up to MK1 in Milton Keynes and Westwood Cross, Thanet.

“The opportunity for Primark is phe-nomenal and will attract other new entrants to out of town,” says Walton.

So, as out-of-town locations become more attractive to a wider spectrum of retailers, rents could be poised to rise at the prime sites.

While some might balk at Fosse Park’s headline rents, Walton believes they are justified. “Retailers wouldn’t pay if it wasn’t a profitable place,” he says.

In fact, Walton believes landlords could demand a lot more for warehouses if they put together a more compelling business case. He says: “Regional retail centres know their customer profile. They use data to find out age, how much they spend and what on, which can make a compelling case to would-be tenants. That information is not as advanced in out of town.”

Any big increase in rents has largely been driven by discounters such as Poundland and Poundworld, according

Rents tend to be higher out of town than on the high street. Gemma Goldfingle finds out whether they are likely to rise or fall in the future

Rents poised to rise?

“RetaileRs Wouldn’t pay if it Wasn’t a pRofitable place”Dominic Walton, CBRE

Top 10 headline renTsRank 2011 HigHest Rent

(£peR sq ft)YeaR acHieved scHeme Location sq ft

1 £105 2008 fosse shopping park Leicester 416,536

2 £75 2006 Brookfield Retail park cheshunt 90,000

3 £65 2005 colney fields shopping park

st albans 58,212

4 £63.75 2008 Birstall shopping park Leeds 163,730

5 £62.50 2005 castlepoint Bournemouth 645,000

6 £62 2008 fforestfach parc swansea 134,808

7 £60 2005 the fort shopping park Birmingham 283,988

8 £57.90 2007 teesside shopping park stockton-on-tees 348,553

9= £55 2007 fort kinnaird edinburgh 506,000

9= £55 2006 new mersey shopping park

Liverpool 483,268

9= £55 2005 Brent south shopping park

London 92,000

Source: Trevor Wood Associates

UNDERSTANDING ASSET MANAGEMENT

TELEPHONE: 01244 400002 | FISHERWILSON.CO.UK

WarehousingrenTs

XII Retail Week October 2012 www.retail-week.com

While out-of-town retail parks have a reputation for higher rents than the high street, prices have

remained fairly flat of late. According to The Definitive Guide to

Retail & Leisure Parks 2012, published by Trevor Wood Associates, the highest level of rent paid at the top 10 retail parks has not changed throughout the year.

The out-of-town scheme with the highest rental value is the 416,536 sq ft Fosse Park in Leicester, which achieved a £105 per sq ft headline rent on a letting to footwear retailer Clarks made in 2008.

“The top rents on the best retail parks have not radically changed in the past four to five years,” says CBRE senior director Dominic Walton. “There’s pres-sure on rents but the very best parks are relatively resilient.”

The downturn has caused prime loca-tions to thrive while the problems of struggling developments have been exacerbated. He says rental rates on most parks have dropped between 10% and 40% from their 2006 peak and that retailers judge out-of-town parks on three major criteria: location, whether it has critical mass and what type of plan-ning consent it has.

From a planning perspective, certain allowances will make a development more attractive to retailers. “If planning allows retailers to build mezzanines, that can boost rental rates. Trading den-sity is commensurate with higher rents,” Walton explains.

to Trevor Wood Associates director Trevor Wood: “They’ve been some of the most aggressive takers of space and have been in competition with each other.”

Although the rental market out of town has remained flat over the past year, Walton believes the locations are well placed to benefit when the econ-omy picks up. Some retailers such as Next class out of town as integral to store expansion after being wooed by the accessibility of developments. Plus, the lack of development in town centres make retail parks well-positioned to profit post-downturn.

Town centre development has stalled with only one development, Trinity Leeds, expected to open next year. That is likely to lead to more retailers moving out of town.

Walton says: “You can rapidly build stores out of town, which can be online in less than a year, while you’re looking at two years for in town. When the econ-omy and market dynamics improve there is an opportunity for rental growth, but it will be a long time before we hit the peaks of 2006.”

The lack of development is also encouraging what Walton calls “more interesting retailers,” such as John Lewis and Debenhams, to expand their out-of-town portfolios.

Clarks, Office and River Island are relatively new to the market and, according to Walton, Primark is to open its first retail park stores after signing up to MK1 in Milton Keynes and Westwood Cross, Thanet.

“The opportunity for Primark is phe-nomenal and will attract other new entrants to out of town,” says Walton.

So, as out-of-town locations become more attractive to a wider spectrum of retailers, rents could be poised to rise at the prime sites.

While some might balk at Fosse Park’s headline rents, Walton believes they are justified. “Retailers wouldn’t pay if it wasn’t a profitable place,” he says.

In fact, Walton believes landlords could demand a lot more for warehouses if they put together a more compelling business case. He says: “Regional retail centres know their customer profile. They use data to find out age, how much they spend and what on, which can make a compelling case to would-be tenants. That information is not as advanced in out of town.”

Any big increase in rents has largely been driven by discounters such as Poundland and Poundworld, according

Rents tend to be higher out of town than on the high street. Gemma Goldfingle finds out whether they are likely to rise or fall in the future

Rents poised to rise?

“RetaileRs Wouldn’t pay if it Wasn’t a pRofitable place”Dominic Walton, CBRE

Top 10 headline renTsRank 2011 HigHest Rent

(£peR sq ft)YeaR acHieved scHeme Location sq ft

1 £105 2008 fosse shopping park Leicester 416,536

2 £75 2006 Brookfield Retail park cheshunt 90,000

3 £65 2005 colney fields shopping park

st albans 58,212

4 £63.75 2008 Birstall shopping park Leeds 163,730

5 £62.50 2005 castlepoint Bournemouth 645,000

6 £62 2008 fforestfach parc swansea 134,808

7 £60 2005 the fort shopping park Birmingham 283,988

8 £57.90 2007 teesside shopping park stockton-on-tees 348,553

9= £55 2007 fort kinnaird edinburgh 506,000

9= £55 2006 new mersey shopping park

Liverpool 483,268

9= £55 2005 Brent south shopping park

London 92,000

Source: Trevor Wood Associates

UNDERSTANDING ASSET MANAGEMENT

TELEPHONE: 01244 400002 | FISHERWILSON.CO.UK

Contact us today : Rob Asbury0207 312 7458rob.asbury@montagu-evans.co.uk Martin Gudaitis0141 227 4672martin.gudaitis@montagu-evans.co.uk

Level of ServiceWhatever advice you require, we will provide a level of service which consistently exceeds expectations. One Stop ShopWe bring together multi-disciplinary teams made up of agency, planning, valuation, management, rating, research and investment providing a one stop shop for all your retail and leisure needs.

HOLISTIC,

‘CLIENT’

FOCUSED

APPROACH

To retail &

leisure in all

locations advising

landlords,

developers

and occupiers

RETAIL &

LEISURE

LANDLORD

& TENANTRETAIL &

LEISURE

INVESTMENT RETAIL &

LEISURE

AGENCY

(Acting for

landlord &

tenant):- high

st, out of town,

shopping

centre &

supermarkets

RETAIL &

LEISURE

DEVELOPMENT

CONSULTANCY

& ASSET

MANAGEMENT

RETAIL &

LEISURE

PLANNING

CONSULTANCY

INCLUDIN

G

COMPULSORY

PURCHASE

& LISTED

BUILDINGS

EXPERTISE

RETAIL &

LEISURE

PROFESSIONAL

SERVICES

INCLUDIN

G

RATING &

VALUATION

CALL

COMPETITORS

COLLECTRETAIL EXPERTISE

Big retail players choose...

CALL

COMPETITORS WarehousingeMPTY uniTs

The past few years have been a diffi cult time for some big-box UK retailers. A lethal combi-nation of weak consumer

spending and particular corporate problems have caused trouble for a clutch of retailers and left landlords with units to fi ll. The growth of online retail and Tesco’s admission earlier this year that some of its stores are bigger than they need to be has also thrown out-of-town retail space fi rmly into the spotlight.

High-profile administrations including MFI, Focus DIY, and Allied Carpets left landlords with dozens of empty big-box stores, and many

Research by property analyst Trevor Wood Associates reveals that the qual-ity of the properties available as a result of this downturn is variable. The Defi n-itive Guide to Retail & Leisure Parks 2012 reveals that a contraction in new development has led to a shortage of prime retail space. As a result, the best existing empty units are snapped up, although research shows there are still locations where property has remained diffi cult to let for some years.

The research also highlights some interesting regional trends. For instance, in 2009, Yorkshire had the highest retail warehousing vacancy rate, at 14% in the second quarter. However, just two and a half years later it is the third lowest, with an 8.4% void rate. Meanwhile, vacancies have remained static in the Southeast since 2006 and increased from 7.8% to 11.6% in Wales. The vacancy rate in Northern Ireland has improved, from 14% in 2006 to 9.5% in 2011.

Retailers are also becoming more demanding. They want the space they pay for to work hard, and many are reviewing their existing estate and seeking to increase the value per sq ft of each store. This can lead to deals such as Wickes’ agreement to rent space to other retailers including Pets at Home. Kingfisher has also said it is reviewing its store estate to assess the optimum store size. The DIY giant may also rent empty units near to its existing stores, because it wants more space in areas it knows are profitable, and where the demographics chime well with its offer.

The big appeal A tightening of planning laws within the National Planning Policy Frame-work, reworked and slimmed down in March, to more explicitly favour in-town development has also had a part to play in dictating demand for empty retail units. The tighter planning laws have made existing out-of-town units more appealing to retailers, because they have already been approved for retail use. Leisure has also increased in importance – a number of landlords with empty units on their hands will hope an adjacent cinema could boost footfall and demand for property in retail parks.

Alastair Crowdy, national head of planning, development and regenera-tion at property consultant GL Hearn, says: “Empty units are an issue, partic-ularly for older generation parks, out-side the Southeast. Planners have to rework consents to allow a wider range of goods to be sold. Some leisure is ➤

of the empty units have proven diffi cult to fi ll.

Rob Asbury, head of retail and lei-sure at property consultancy Montagu Evans, believes that poor strategy has been the key factor in the administra-tion of several businesses. But there are other factors at play as well. UK admin-istrations, which also included Land of Leather, have been accompanied by a trend for retailers to downsize. As high-lighted by Tesco and reinforced by a slowdown in planned expansion by Sainsbury’s and Morrisons, the space race is fi nally slowing after two decades of rapid out-of-town growth, particu-larly in food.

“SOME LEISURE IS COMING FORWARD, AND FOOD AND BEVERAGE BUSINESSES ARE POSSIBLE FUTURE USES”Alastair Crowdy, GL Hearn

October 2012 Retail Week XVwww.retail-week.com

A raft of administrations has left landlords with empty big-box units including some that are diffi cult to re-let. Alex Lawson fi nds out what can be done to entice retailers and consumers to them

Running on empty

After administrations such as Focus DIY there

are dozens of empty units

Contact us today : Rob Asbury0207 312 7458rob.asbury@montagu-evans.co.uk Martin Gudaitis0141 227 4672martin.gudaitis@montagu-evans.co.uk

Level of ServiceWhatever advice you require, we will provide a level of service which consistently exceeds expectations. One Stop ShopWe bring together multi-disciplinary teams made up of agency, planning, valuation, management, rating, research and investment providing a one stop shop for all your retail and leisure needs.

HOLISTIC,

‘CLIENT’

FOCUSED

APPROACH

To retail &

leisure in all

locations advising

landlords,

developers

and occupiers

RETAIL &

LEISURE

LANDLORD

& TENANTRETAIL &

LEISURE

INVESTMENT RETAIL &

LEISURE

AGENCY

(Acting for

landlord &

tenant):- high

st, out of town,

shopping

centre &

supermarkets

RETAIL &

LEISURE

DEVELOPMENT

CONSULTANCY

& ASSET

MANAGEMENT

RETAIL &

LEISURE

PLANNING

CONSULTANCY

INCLUDIN

G

COMPULSORY

PURCHASE

& LISTED

BUILDINGS

EXPERTISE

RETAIL &

LEISURE

PROFESSIONAL

SERVICES

INCLUDIN

G

RATING &

VALUATION

CALL

COMPETITORS

COLLECTRETAIL EXPERTISE

Big retail players choose...

CALL

COMPETITORS WarehousingeMPTY uniTs

The past few years have been a diffi cult time for some big-box UK retailers. A lethal combi-nation of weak consumer

spending and particular corporate problems have caused trouble for a clutch of retailers and left landlords with units to fi ll. The growth of online retail and Tesco’s admission earlier this year that some of its stores are bigger than they need to be has also thrown out-of-town retail space fi rmly into the spotlight.

High-profile administrations including MFI, Focus DIY, and Allied Carpets left landlords with dozens of empty big-box stores, and many

Research by property analyst Trevor Wood Associates reveals that the qual-ity of the properties available as a result of this downturn is variable. The Defi n-itive Guide to Retail & Leisure Parks 2012 reveals that a contraction in new development has led to a shortage of prime retail space. As a result, the best existing empty units are snapped up, although research shows there are still locations where property has remained diffi cult to let for some years.

The research also highlights some interesting regional trends. For instance, in 2009, Yorkshire had the highest retail warehousing vacancy rate, at 14% in the second quarter. However, just two and a half years later it is the third lowest, with an 8.4% void rate. Meanwhile, vacancies have remained static in the Southeast since 2006 and increased from 7.8% to 11.6% in Wales. The vacancy rate in Northern Ireland has improved, from 14% in 2006 to 9.5% in 2011.

Retailers are also becoming more demanding. They want the space they pay for to work hard, and many are reviewing their existing estate and seeking to increase the value per sq ft of each store. This can lead to deals such as Wickes’ agreement to rent space to other retailers including Pets at Home. Kingfisher has also said it is reviewing its store estate to assess the optimum store size. The DIY giant may also rent empty units near to its existing stores, because it wants more space in areas it knows are profitable, and where the demographics chime well with its offer.

The big appeal A tightening of planning laws within the National Planning Policy Frame-work, reworked and slimmed down in March, to more explicitly favour in-town development has also had a part to play in dictating demand for empty retail units. The tighter planning laws have made existing out-of-town units more appealing to retailers, because they have already been approved for retail use. Leisure has also increased in importance – a number of landlords with empty units on their hands will hope an adjacent cinema could boost footfall and demand for property in retail parks.

Alastair Crowdy, national head of planning, development and regenera-tion at property consultant GL Hearn, says: “Empty units are an issue, partic-ularly for older generation parks, out-side the Southeast. Planners have to rework consents to allow a wider range of goods to be sold. Some leisure is ➤

of the empty units have proven diffi cult to fi ll.

Rob Asbury, head of retail and lei-sure at property consultancy Montagu Evans, believes that poor strategy has been the key factor in the administra-tion of several businesses. But there are other factors at play as well. UK admin-istrations, which also included Land of Leather, have been accompanied by a trend for retailers to downsize. As high-lighted by Tesco and reinforced by a slowdown in planned expansion by Sainsbury’s and Morrisons, the space race is fi nally slowing after two decades of rapid out-of-town growth, particu-larly in food.

“SOME LEISURE IS COMING FORWARD, AND FOOD AND BEVERAGE BUSINESSES ARE POSSIBLE FUTURE USES”Alastair Crowdy, GL Hearn

October 2012 Retail Week XVwww.retail-week.com

A raft of administrations has left landlords with empty big-box units including some that are diffi cult to re-let. Alex Lawson fi nds out what can be done to entice retailers and consumers to them

Running on empty

After administrations such as Focus DIY there

are dozens of empty units

WarehousingeMPTY uniTs

➤

XVI Retail Week October 2012 www.retail-week.com

coming forward, and food and beverage businesses are possible future uses.”

But, he adds, retail is still a more profitable use of space than, for instance, building residential units. He says: “Particularly outside the South-east, the value differential between retail and other uses suggests that it is worth trying to improve the fortunes of a retail park, rather than pursuing alternative uses.”

One key growth sector is the dis-counters. Since the UK first entered recession in 2008, discounters includ-ing German grocers Aldi and Lidl as well as non-food retailers including Poundland, Poundworld, Sports Direct, The Range and Wilkinson have all been on the hunt to top up their store portfolio. “The discounters, once the haunt solely of the of the lower classes and poorer income families have now become respectable to the middle classes, who are much more value driven and discerning shoppers,” says Asbury.

Discounters’ tight margins mean they seek low rents, capped or fixed rent reviews and long rent-free periods or high capital incentives. “Landlords are prepared to accept this in return for having the unit occupied by a retailer who they think will survive in today’s recessionary time and with a guaranteed income stream in place,” explains Asbury.

Short and sweetAs well as discounters, the rise in temporary retailers both in and out of town has been a notable trend in the last five years. Retailers including Trading Bargains, FW Home Store, Computers for Africa, Lee Longlands Clearance and Litecraft.co.uk are among those to have taken short lets in retail units to generate a short burst in trading. “The arrangement works well for landlords, who minimise short-term liabilities, and the tenant, who is either able to clear excess stock or test the market without long-term liability. There are currently about eight units occupied in this way,” says Trevor Wood.

Opportunism is not just confined to temporary retailers. One of the most sig-nificant out-of-town deals this year was the acquisition of 10 former Best Buy stores by Morrisons-owned baby etailer Kiddicare in January. The pounce by Kiddicare could set in motion a trend for a number of pure-play operators to seek a small store estate as they consider adopting a multichannel approach. Landlords will also keep a keen eye on retailers that have a stated intention to expand out of town, including Dobbies

The administration of retailers including MFI left landlords with dozens of empty bix-box stores

Vacancy rate by region Q2 2012 Q4 2011 Q2 2011 Q4 2010

east anglia 9.0% 10.6% 12.1% 8.9%

east Midlands 7.2% 7.5% 8.1% 6.3%

north 10.2% 11.4% 13.0% 12.1%

northern ireland 9.0% 9.5% 10.0% 10.1%

northwest 9.8% 9.3% 10.1% 10.1%

Scotland 10.4% 10.7% 12.5% 12.1%

Southeast 8.0% 7.8% 7.8% 7.4%

Southwest 9.9% 9.9% 9.2% 8.5%

Wales 10.8% 11.6% 12.8% 9.8%

West Midlands 9.7% 9.7% 9.7% 8.5%

yorkshire and Humberside 8.0% 8.4% 9.4% 10.9%

Warehouse VacancY raTes in The uK

Garden Centres, Sports Direct and Next, which is on the hunt for further loca-tions for its home and garden format.

However, landlords may have to look beyond traditional retail to fill some empty units. With transport links to retail parks traditionally very strong, units could interest commercial cus-tomers looking for warehouse premises as well as self-storage firms, which – particularly in London where space is at a premium – continue to thrive.

Ultimately, the market appears capable of coping with the re-letting of retail units as long the numbers

remain manageable and too much space isn’t released on to the market simultaneously. “Landlords are resil-ient people and where there are vacan-cies in portfolios, asset managers will be forced to look at reconfiguring units, varying planning consents to appeal to a wider market or possibly redeveloping in extreme cases for alternative uses including leisure,” says Asbury. It’s a challenge, but not insurmountable. Locations that are well linked by road networks and good footfall and lower rents will always be appealing to retailers.

Source: Trevor Wood Associates

• The South West’s largest independent Retail Property Consultancy.

• Bristol based, with a wealth of local, regional and national expertise.

• Track record of achieving outstanding results for our Retailer, Developer and Landlord clients.

• 3 million sq ft of retail space under active asset management, including 35 shopping centres and retail parks in over 30 major towns and cities in the South West and South Wales regions.

100% Pure Retail

• Agency • Development • Investment • Asset Management • Professional •

BristolBristolBristol

WarehousingeMPTY uniTs

➤

XVI Retail Week October 2012 www.retail-week.com

coming forward, and food and beverage businesses are possible future uses.”

But, he adds, retail is still a more profitable use of space than, for instance, building residential units. He says: “Particularly outside the South-east, the value differential between retail and other uses suggests that it is worth trying to improve the fortunes of a retail park, rather than pursuing alternative uses.”

One key growth sector is the dis-counters. Since the UK first entered recession in 2008, discounters includ-ing German grocers Aldi and Lidl as well as non-food retailers including Poundland, Poundworld, Sports Direct, The Range and Wilkinson have all been on the hunt to top up their store portfolio. “The discounters, once the haunt solely of the of the lower classes and poorer income families have now become respectable to the middle classes, who are much more value driven and discerning shoppers,” says Asbury.

Discounters’ tight margins mean they seek low rents, capped or fixed rent reviews and long rent-free periods or high capital incentives. “Landlords are prepared to accept this in return for having the unit occupied by a retailer who they think will survive in today’s recessionary time and with a guaranteed income stream in place,” explains Asbury.

Short and sweetAs well as discounters, the rise in temporary retailers both in and out of town has been a notable trend in the last five years. Retailers including Trading Bargains, FW Home Store, Computers for Africa, Lee Longlands Clearance and Litecraft.co.uk are among those to have taken short lets in retail units to generate a short burst in trading. “The arrangement works well for landlords, who minimise short-term liabilities, and the tenant, who is either able to clear excess stock or test the market without long-term liability. There are currently about eight units occupied in this way,” says Trevor Wood.

Opportunism is not just confined to temporary retailers. One of the most sig-nificant out-of-town deals this year was the acquisition of 10 former Best Buy stores by Morrisons-owned baby etailer Kiddicare in January. The pounce by Kiddicare could set in motion a trend for a number of pure-play operators to seek a small store estate as they consider adopting a multichannel approach. Landlords will also keep a keen eye on retailers that have a stated intention to expand out of town, including Dobbies

The administration of retailers including MFI left landlords with dozens of empty bix-box stores

Vacancy rate by region Q2 2012 Q4 2011 Q2 2011 Q4 2010

east anglia 9.0% 10.6% 12.1% 8.9%

east Midlands 7.2% 7.5% 8.1% 6.3%

north 10.2% 11.4% 13.0% 12.1%

northern ireland 9.0% 9.5% 10.0% 10.1%

northwest 9.8% 9.3% 10.1% 10.1%

Scotland 10.4% 10.7% 12.5% 12.1%

Southeast 8.0% 7.8% 7.8% 7.4%

Southwest 9.9% 9.9% 9.2% 8.5%

Wales 10.8% 11.6% 12.8% 9.8%

West Midlands 9.7% 9.7% 9.7% 8.5%

yorkshire and Humberside 8.0% 8.4% 9.4% 10.9%

Warehouse VacancY raTes in The uK

Garden Centres, Sports Direct and Next, which is on the hunt for further loca-tions for its home and garden format.

However, landlords may have to look beyond traditional retail to fill some empty units. With transport links to retail parks traditionally very strong, units could interest commercial cus-tomers looking for warehouse premises as well as self-storage firms, which – particularly in London where space is at a premium – continue to thrive.

Ultimately, the market appears capable of coping with the re-letting of retail units as long the numbers

remain manageable and too much space isn’t released on to the market simultaneously. “Landlords are resil-ient people and where there are vacan-cies in portfolios, asset managers will be forced to look at reconfiguring units, varying planning consents to appeal to a wider market or possibly redeveloping in extreme cases for alternative uses including leisure,” says Asbury. It’s a challenge, but not insurmountable. Locations that are well linked by road networks and good footfall and lower rents will always be appealing to retailers.

Source: Trevor Wood Associates

• The South West’s largest independent Retail Property Consultancy.

• Bristol based, with a wealth of local, regional and national expertise.

• Track record of achieving outstanding results for our Retailer, Developer and Landlord clients.

• 3 million sq ft of retail space under active asset management, including 35 shopping centres and retail parks in over 30 major towns and cities in the South West and South Wales regions.

100% Pure Retail

• Agency • Development • Investment • Asset Management • Professional •

BristolBristolBristol

Warehousingdevelopment

retailers are used to hearing about the development – or rather lack – of new shopping centres coming onstream over

the next few years, but there’s been little emphasis on the development pipeline for out-of-town retail parks, where demand can often be stronger.

That’s not to say development hasn’t been affected by the recession. Figures from consultancy Trevor Wood Associ-ates identify 82 schemes thought likely to go ahead before 2018, up on the 72 schemes listed last year, but down on the 178 schemes planned in 2006 before the onset of the financial crisis. Commercial property and real estate services adviser CBRE’s report on retail warehouse parks shows that overall the pipeline has con-tracted by 12.5% since 2007, while the amount currently under construction is just 34% of what it then was.

In addition, the strengthening of town centre first policies has made obtaining planning permission for out-of-town developments difficult and landlords are often resorting to sprucing up existing developments instead. “The planning for these schemes isn’t being granted these days. They’re trying to resolve the regen-eration of town centres, so it’s hard for us to get new stock in the pipeline. [Instead] we’re looking at recycling old stock,” says John Maddison, head of retail ware-house asset management at British Land.

Mike Taylor, director of out-of-town retail and leisure at property firm Jones Lang LaSalle, agrees that asset manage-ment is high on the agenda, as landlords

Group’s 170,000 sq ft Prestatyn Shopping Park will open, and will feature a 50,000 sq ft M&S, a 75,000 sq ft Tesco Extra, plus River Island, Poundland, New Look, Boots and Carphone Warehouse.

Meanwhile, in 2014 the 179,000 sq ft Vanguard Shopping Park will open adja-cent to Monks Cross in York, bringing with it M&S and John Lewis. Walton says this provided a compelling jobs argu-ment, and together with added benefits including a community stadium, helped get the local council on side.

At present, demand is outstripping supply in key areas. Retailers seeking to expand their portfolios such as Next, John Lewis, M&S, Primark and H&M, have all been increasing their presence in retail parks. “They realise there is no space that’s going to come online for years to come, and the only opportunity they’ve got to increase their floor space is acquiring out of town,” says Dominic Walton, head of out of town at CBRE.

Debenhams, for instance, is to take an anchor at Fort Kinnaird in Edinburgh, which is managed by British Land and jointly owned by Hercules and Crown Estate. “It’s quite unique to build a brand new big Debenhams out of town, it’s not something that happened in the past. It’s the first time we’ll do something that bespoke for a department store in our market,” says Maddison. He adds that there is also demand from Next for either additional or larger units to house its Home offer, and there are a “few deals coming up” that take the retailer from 10,000 sq ft to 25,000 sq ft units.

However, Clem Constantine, property director of M&S, says the lack of new shopping centres in the pipeline doesn’t mean retailers are being driven out of town. “We will open out-of-town stores where it’s right to do so, but M&S is predominantly a high street and shopping centre retailer and there are quite a few smaller, attractive in-town developments coming on stream that are a pull to town centres for retailers like us,” he emphasises.

Despite this, the number of retailers that still aim to expand their store portfo-lios shows that occupier demand is there, and the retail property industry will need to continue working closely with local authorities to gain consents for out-of-town retail parks.

try to “squeeze out more floor space, or to try and reconfigure floor space so that it meets the modern requirements of retail-ers”, generally by expansion.

Some local authorities are adopting a more pragmatic attitude towards grant-ing planning permission for out-of-town retail parks. Many local councils are keen to ensure they don’t lose key retail-ers, and the associated jobs and boost to the local economy, to a neighbouring area. “The planning environment is not easy, but has got easier, following the rec-ognition that retail jobs are real jobs,” says Dominic O’Rourke, head of retail warehousing at Land Securities.

On the horizonAnd there are some developments expected to surface over the next year. Land Securities has secured planning consents for various asset management and development initiatives, including at Taplow – a 131,500 sq ft redevelop-ment of the existing Bishop Centre, anchored by a 50,000 sq ft Tesco. These consents represent total floor space of 678,370 sq ft, 301,870 sq ft of which is new net additional floor space. “The development programme has the poten-tial to move the dial for us,” says O’Rourke.

The Crown Estate-owned 117,500 sq ft MK1 Shopping Park in Milton Keynes is anticipated to open in October, and will feature a 10,000 sq ft H&M, a 65,000 sq ft Marks & Spencer, a 15,000 sq ft Outfit, a 7,500 sq ft River Island, and a 30,000 sq ft Primark. In April next year, Stadium

“We Will Open Out-Of-tOWn stOres Where it’s right tO dO sO”Clem Constantine, M&S

A slowdown in the development of new shopping centres and continuing problems on the high street mean some retailers are focusing on the pipeline for out of town, writes James Knowles

The out-of-town pipeline

XVIII retail Week October 2012 www.retail-week.com

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TWA_RL2013_databaseAd_RetailWeekAd-A4-outlines.pdf 1 28/09/2012 12:51

Warehousingdevelopment

retailers are used to hearing about the development – or rather lack – of new shopping centres coming onstream over

the next few years, but there’s been little emphasis on the development pipeline for out-of-town retail parks, where demand can often be stronger.

That’s not to say development hasn’t been affected by the recession. Figures from consultancy Trevor Wood Associ-ates identify 82 schemes thought likely to go ahead before 2018, up on the 72 schemes listed last year, but down on the 178 schemes planned in 2006 before the onset of the financial crisis. Commercial property and real estate services adviser CBRE’s report on retail warehouse parks shows that overall the pipeline has con-tracted by 12.5% since 2007, while the amount currently under construction is just 34% of what it then was.

In addition, the strengthening of town centre first policies has made obtaining planning permission for out-of-town developments difficult and landlords are often resorting to sprucing up existing developments instead. “The planning for these schemes isn’t being granted these days. They’re trying to resolve the regen-eration of town centres, so it’s hard for us to get new stock in the pipeline. [Instead] we’re looking at recycling old stock,” says John Maddison, head of retail ware-house asset management at British Land.

Mike Taylor, director of out-of-town retail and leisure at property firm Jones Lang LaSalle, agrees that asset manage-ment is high on the agenda, as landlords

Group’s 170,000 sq ft Prestatyn Shopping Park will open, and will feature a 50,000 sq ft M&S, a 75,000 sq ft Tesco Extra, plus River Island, Poundland, New Look, Boots and Carphone Warehouse.

Meanwhile, in 2014 the 179,000 sq ft Vanguard Shopping Park will open adja-cent to Monks Cross in York, bringing with it M&S and John Lewis. Walton says this provided a compelling jobs argu-ment, and together with added benefits including a community stadium, helped get the local council on side.

At present, demand is outstripping supply in key areas. Retailers seeking to expand their portfolios such as Next, John Lewis, M&S, Primark and H&M, have all been increasing their presence in retail parks. “They realise there is no space that’s going to come online for years to come, and the only opportunity they’ve got to increase their floor space is acquiring out of town,” says Dominic Walton, head of out of town at CBRE.

Debenhams, for instance, is to take an anchor at Fort Kinnaird in Edinburgh, which is managed by British Land and jointly owned by Hercules and Crown Estate. “It’s quite unique to build a brand new big Debenhams out of town, it’s not something that happened in the past. It’s the first time we’ll do something that bespoke for a department store in our market,” says Maddison. He adds that there is also demand from Next for either additional or larger units to house its Home offer, and there are a “few deals coming up” that take the retailer from 10,000 sq ft to 25,000 sq ft units.

However, Clem Constantine, property director of M&S, says the lack of new shopping centres in the pipeline doesn’t mean retailers are being driven out of town. “We will open out-of-town stores where it’s right to do so, but M&S is predominantly a high street and shopping centre retailer and there are quite a few smaller, attractive in-town developments coming on stream that are a pull to town centres for retailers like us,” he emphasises.

Despite this, the number of retailers that still aim to expand their store portfo-lios shows that occupier demand is there, and the retail property industry will need to continue working closely with local authorities to gain consents for out-of-town retail parks.

try to “squeeze out more floor space, or to try and reconfigure floor space so that it meets the modern requirements of retail-ers”, generally by expansion.

Some local authorities are adopting a more pragmatic attitude towards grant-ing planning permission for out-of-town retail parks. Many local councils are keen to ensure they don’t lose key retail-ers, and the associated jobs and boost to the local economy, to a neighbouring area. “The planning environment is not easy, but has got easier, following the rec-ognition that retail jobs are real jobs,” says Dominic O’Rourke, head of retail warehousing at Land Securities.

On the horizonAnd there are some developments expected to surface over the next year. Land Securities has secured planning consents for various asset management and development initiatives, including at Taplow – a 131,500 sq ft redevelop-ment of the existing Bishop Centre, anchored by a 50,000 sq ft Tesco. These consents represent total floor space of 678,370 sq ft, 301,870 sq ft of which is new net additional floor space. “The development programme has the poten-tial to move the dial for us,” says O’Rourke.

The Crown Estate-owned 117,500 sq ft MK1 Shopping Park in Milton Keynes is anticipated to open in October, and will feature a 10,000 sq ft H&M, a 65,000 sq ft Marks & Spencer, a 15,000 sq ft Outfit, a 7,500 sq ft River Island, and a 30,000 sq ft Primark. In April next year, Stadium

“We Will Open Out-Of-tOWn stOres Where it’s right tO dO sO”Clem Constantine, M&S

A slowdown in the development of new shopping centres and continuing problems on the high street mean some retailers are focusing on the pipeline for out of town, writes James Knowles

The out-of-town pipeline

XVIII retail Week October 2012 www.retail-week.com

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TWA_RL2013_databaseAd_RetailWeekAd-A4-outlines.pdf 1 28/09/2012 12:51

14-16 November 2012, Cannes

JOIN THE UK STAND AT MAPIC

The UK Stand at MAPIC brings together developers, cities and retail property professionals from the UK in one place, and is the place to be if you want to do business with the international retail real estate market.

A limited number of places are currently available. For further information, contact Niki Kernohan on

020 7636 4044 or email niki.kernohan@pipers.co.uk

Confirmed participants are:

AECOMBlake LapthornCapital Shopping CentresThe Crown EstateDavis LangdonDTZForeman RobertsFSP RetailFTiGardiner & TheobaldGreig & Stephenson

Harper Dennis HobbsHolder Mathias ArchitectsHolistic GroupLondon Designer OutletQuintain Estates & DevelopmentRetail WeekReveal SystemsScott LightingSweett GroupWaterman Group

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