Orchard Street Managing Partner Philip Gadsden's view on the outlook of the retail market

22 December 2020

See Managing Partner, Philip Gadsden's comments on the outlook of the retail market.

Over a number of decades there has been a huge addition to the supply of retail property. In a country as committed to consumer spending as the UK, town centre retail development worked well for a while but now a record proportion of retail sales is online (> 25%) and with home delivery or (click and) collection from an out-of-town retail park growing rapidly, shoppers don’t need to visit physical in-town shops for fashion and comparison shopping like they once did. New entrants with innovative ideas (e.g. online only) have shone a spotlight on old stale formats, and many established retailers – especially fashion – have been found wanting.

But the best and/or most convenient retail locations will remain popular – indeed, the best food and value out of town parks now have low to zero vacancy and stable rental levels. At the moment however, the bottom for many town centres seems a long way away because of chronic over supply. Up and down the country, councils will need to lead the way so that the point of their town centre gets re-defined, space gets re-purposed and a better demand/supply equilibrium gets established. Not every town centre needs a branch of every fashion retailer because fashion can be bought online or in a large city centre or regional mall. Town centres will be smaller and will be convenient and leisure-orientated and the best town centres will re-discover their former glories especially those that attract students and tourists and have

growing populations. With almost all that change still to happen, will the in-town retail market bottom out in 2021? No. But the best centres with enlightened leadership will make a start. The better out of town parks however may well bottom out in 2021. Indeed, with re-based rents and high occupancy, perhaps out of town retail offers the best current bargain in the UK market.

https://reactnews.com/article/outlook-2021-will-the-retail-market-bottom-out-next-year/

END

For more information:

Dana Eisner
Orchard Street Investment Management
+44 (0)20 7494 8860
deisner [at] orchard-street.co.uk

Talia Jessener
FTI Consulting
+44 (0)20 3727 1000
osim [at] fticonsulting.com

Notes to Editors:

Orchard Street Investment Management
Established in 2004, Orchard Street Investment Management LLP is a leading specialist commercial property investment manager, focused on the UK market. It acts on behalf of institutional clients world-wide to advise on investing in and the active management of property assets, including industrial, retail warehouses, offices and shopping centres. Orchard Street currently has assets under management exceeding £4 billion.