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.
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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.