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Retail warehousing oct2012_lr[1]

  1. 1. WAREHOUSING October2012 The development pipeline for out-of-town retail parks pXVIII The rise and fall of retail rental levels pXII Retailers promote their multichannel credentials pV VALUE HEADS OUT OF TOWN PROPERTY Value retailers change focus from the high street to big-box schemes WAREHOUSING October2012 PROPERTY
  2. 2. Helping brands grow tHeir retail business Debenhams’ first new format store on a shopping park now open in Chesterfield
  3. 3. October 2012 Retail Week WAREHOUSING O ut-of-town retailing is in the throes of significant 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 reflects 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-fill 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 flat, park landlords and retailers must work harder than ever to win spend. Changingtheretailmix Rebecca Thomson, Supplement Editor CONTENTS WAREHOUSING SUPPLEMENT Supplement Editor Rebecca Thomson 020 7728 5670 Contributors Colette Fahy, Gemma Goldfingle, Tiffany Holland, James Knowles, Alex Lawson Supplements Production Editor Tracey Gardner 020 7728 4129 Art Editor Jon Hart 020 7728 3519 Production Manager Paddy Orchard 020 7728 4111 Display Account Manager Jennifer Saunders 020 7728 3849 Commercial Director Mandy Cluskey 020 7728 3586 Managing Director, Retail Tracey Davies 020 7728 3567 Multichannel pV Retailers are using warehouses to promote their digital innovation Rents pXII Are retail rents likely to rise or fall in the future? Empty units pXV After a raft of administrations, landlords are finding it hard to re-let big box units Value shift pVII Why value retailers are now moving out of town Development pXVIII Why retailers are focusing on the pipeline of out-of-town retail parks
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  5. 5. Warehousing multichannel i n 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. “Thereismorespacetoallowforcompu- ter terminals and click-and-collect areas. Althoughmanyofthestore’selements 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. Oneretailerthathasbenefitedfromits multichannel approach is department storeJohnLewis.Onlinesalesaccounted 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-collectisanimportantaddi- 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 theflexibilitytopickuptheironlinepur- 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. “Serviceinonlineretailingisveryprimi- tive. So far, the monumental growth of onlinehasn’tcalledformajorinvestment 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 massiveandout-of-townretailingwillbe used in a major way.” Theaccessibilityofretailparks,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 tobemorepickuppointsdevelopedspe- cifically in retail parks. However, he believes the model will adapt,andretailerswilleventuallyshare 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 choice A 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 Retailersareusingwarehousestopromotetheirmultichannel credentialsinout-of-townschemes.GemmaGoldfinglereports Let’sgetdigital
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  7. 7. Warehousing Changing MiX t he 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 fill 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 benefiting.” Ward agrees, saying that many land- lords are often surprised by the quality of Poundworld shopfits and the prod- ucts they sell. “The biggest improvement landlords see is the significant 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 filling space.” “WiTh a biggeR space We can offeR The cusToMeR a gReaTeR choice” Mark Ward, Poundworld October 2012 Retail Week Valueretailersaremovingoutoftown.TiffanyHollandfindsoutwhy, andlooksattheimplicationsastheyswitchfocusfromthehighstreet Thechangingface ofbig-boxretail 99p Stores has branched out to retail parks by opening Family Bargains
  8. 8. Warehousing Changing MiX ➤ VIII Retail Week October 2012 “TheRe’s a baRRieR To enTRy on ouT-of-ToWn ReTail paRks if you’Re noT a Well-knoWn ReTaileR, buT aTTiTudes aRe changing” JasonTyldesley,CSLSofas 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 efforttobecomeapreferredstoreonout- 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- townlocations,wherebiggerstorestend togeneratehigherturnoverandretailers can offer customers extended ranges and exclusive products. A Next spokesman says it wants to open larger stores on retail parks that haveaDIYandgardeningoffer,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 townratherthanintownwhenwanting tomakeasignificantpurchase.Nexthas 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. Highstreetshavebeenhithardbytherecession,andthe currentvacancyrateatarecord14.6%.Butretailersare committedtosuchlocations.Poundworldproperty directorMarkWardsayssinceJanuarythisyearthe retailerhasopened44stores and80%wereonhigh streets. ButMarks&Spencer directorofpropertyClem Constantinesaysretailerswill gowherethelocationisright. “Thehighstreetneeds investment.Ifatowncentre isallowedtodie,itdoesn’t helpuswithourdecision aboutwheretolocatea store,”hecomments. M&Saimstoincreasespacebetween2%and5%by 2015andislookinginandoutoftown.AlthoughM&Shas just25storeslocatedoutoftownoutofmorethan700 storesintotal,itrecentlyopeneditsCheshireOaksbig boxstoretotestitsmultichannelvision. Constantinebelievestowncentresarestrugglingto rejuvenatethemselves,whichcouldpushcustomersto traveloutoftown. “Peoplewanttogowhere itiseasytoshop,which includeseasyparking,well-lit areasandaleisureoffering, butifthehighstreetdoesn’t havethatthentheywilltravel furtherout.” CSLmanagingdirector JasonTyldesleybelieves highstreetsandretail parksshouldcomplement eachotherratherthanseeing themasrivalretaillocations. “Theperceptionisthatretailparksaredangerous,” hesays.“Butthelocationsneedtobeintegrated.” out of toWn vs high street Poundworld continues to open high street stores C M Y CM MY CY CMY K
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  12. 12. Warehousing renTs XII Retail Week October 2012 W hile 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 levelofrentpaidatthetop10retailparks hasnotchangedthroughouttheyear. The out-of-town scheme with the highest rental value is the 416,536 sq ft Fosse Park in Leicester, which achieved a£105persqftheadlinerentonaletting tofootwearretailerClarksmadein2008. “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.” Thedownturnhascausedprimeloca- tions to thrive while the problems of struggling developments have been exacerbated.Hesaysrentalratesonmost 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- sityiscommensuratewithhigherrents,” Walton explains. to Trevor Wood Associates director TrevorWood:“They’vebeensomeofthe mostaggressivetakersofspaceandhave 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 Nextclassoutoftownasintegraltostore 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 thereisanopportunityforrentalgrowth, 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 interestingretailers,”suchasJohnLewis 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 WestwoodCross,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. WhilesomemightbalkatFossePark’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 coulddemandalotmoreforwarehouses if they put together a more compelling business case. He says: “Regional retail centres know their customer profile. Theyusedatatofindoutage,howmuch 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 Rentstendtobehigheroutoftownthanonthehighstreet.Gemma Goldfinglefindsoutwhethertheyarelikelytoriseorfallinthefuture Rentspoisedtorise? “RetaileRs Wouldn’t pay if it Wasn’t a pRofitable place” Dominic Walton, CBRE Top 10 headline renTs Rank 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
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  15. 15. Warehousing eMPTY uniTs T he past few years have been a difficult 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 fill. 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 firmly 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 Defin- 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 difficult 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 difficult to fill. 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 raceisfinallyslowingaftertwodecades of rapid out-of-town growth, particu- larly in food. “SOMELEISURE IS COMING FORWARD, AND FOOD AND BEVERAGE BUSINESSES ARE POSSIBLE FUTURE USES” Alastair Crowdy, GL Hearn October 2012 Retail Week Araftofadministrationshasleftlandlordswithemptybig-box unitsincludingsomethataredifficulttore-let.AlexLawsonfinds outwhatcanbedonetoenticeretailersandconsumerstothem Running onempty After administrations such as Focus DIY there are dozens of empty units
  16. 16. Warehousing eMPTY uniTs ➤ XVI Retail Week October 2012 comingforward,andfoodandbeverage 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,SportsDirect, 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’tightmarginsmeanthey 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 sweet As well as discounters, the rise in temporary retailers both in and out of townhasbeenanotabletrendinthelast five years. Retailers including Trading Bargains, FW Home Store, Computers forAfrica,LeeLonglandsClearanceand are among those to have taken short lets in retail units togenerateashortburstintrading.“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 temporaryretailers.Oneofthemostsig- 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 seekasmallstoreestateastheyconsider 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 GardenCentres,SportsDirectandNext, which is on the hunt for further loca- tions for its home and garden format. However,landlordsmayhavetolook 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 – particularlyinLondonwherespaceisat 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.Locationsthatarewell linked by road networks and good footfall and lower rents will always be appealing to retailers. Source: Trevor Wood Associates
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  18. 18. Warehousing development r etailers 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 demandcanoftenbestronger. 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 schemeslistedlastyear,butdownonthe 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 just34%ofwhatitthenwas. In addition, the strengthening of town centre first policies has made obtaining planning permission for out-of-town developmentsdifficultandlandlordsare often resorting to sprucing up existing developmentsinstead.“Theplanningfor these schemes isn’t being granted these days. They’re trying to resolve the regen- erationoftowncentres,soit’shardforus togetnewstockinthepipeline.[Instead] we’re looking at recycling old stock,” says John Maddison, head of retail ware- houseassetmanagementatBritishLand. 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’s170,000sqftPrestatynShopping Park will open, and will feature a 50,000 sqftM&S,a75,000sqftTescoExtra,plus River Island, Poundland, New Look, BootsandCarphoneWarehouse. Meanwhile, in 2014 the 179,000 sq ft VanguardShoppingParkwillopenadja- cent to Monks Cross in York, bringing withitM&SandJohnLewis.Waltonsays this provided a compelling jobs argu- ment, and together with added benefits including a community stadium, helped getthelocalcouncilonside. 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, haveallbeenincreasingtheirpresencein retail parks. “They realise there is no space that’s going to come online for years to come, and the only opportunity they’vegottoincreasetheirfloorspaceis acquiring out of town,” says Dominic Walton,headofoutoftownatCBRE. 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 thereisalsodemandfromNextforeither additional or larger units to house its Home offer, and there are a “few deals coming up” that take the retailer from 10,000sqftto25,000sqftunits. 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 developmentscomingonstreamthatare a pull to town centres for retailers like us,”heemphasises. Despite this, the number of retailers thatstillaimtoexpandtheirstoreportfo- lios shows that occupier demand is there, and the retail property industry will need to continue working closely withlocalauthoritiestogainconsentsfor out-of-townretailparks. tryto“squeezeoutmorefloorspace,orto try and reconfigure floor space so that it meetsthemodernrequirementsofretail- ers”,generallybyexpansion. 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,buthasgoteasier,followingtherec- ognition that retail jobs are real jobs,” says Dominic O’Rourke, head of retail warehousingatLandSecurities. On the horizon And 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. TheCrownEstate-owned117,500sqft 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 7,500sqftRiverIsland,anda30,000sqft Primark. In April next year, Stadium “We Will Open Out-Of-tOWn stOres Where it’s right tO dO sO” Clem Constantine, M&S Aslowdowninthedevelopmentofnewshoppingcentresandcontinuingproblemsonthehigh streetmeansomeretailersarefocusingonthepipelineforoutoftown,writesJamesKnowles Theout-of-townpipeline XVIII retail Week October 2012 C M Y CM MY CY CMY K
  19. 19. 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 Confirmed participants are: AECOM Blake Lapthorn Capital Shopping Centres The Crown Estate Davis Langdon DTZ Foreman Roberts FSP Retail FTi Gardiner & Theobald Greig & Stephenson Harper Dennis Hobbs Holder Mathias Architects Holistic Group London Designer Outlet Quintain Estates & Development Retail Week Reveal Systems Scott Lighting Sweett Group Waterman Group Prices start from £2,000 + VAT