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

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3. October 2012 Retail Week IIIwww.retail-week.com
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. 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 Vwww.retail-week.com
Retailersareusingwarehousestopromotetheirmultichannel
credentialsinout-of-townschemes.GemmaGoldfinglereports
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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 VIIwww.retail-week.com
Valueretailersaremovingoutoftown.TiffanyHollandfindsoutwhy,
andlooksattheimplicationsastheyswitchfocusfromthehighstreet
Thechangingface
ofbig-boxretail
99p Stores has branched
out to retail parks by
opening Family Bargains

8. Warehousing
Changing 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”
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. Warehousing
renTs
XII Retail Week October 2012 www.retail-week.com
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. 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 XVwww.retail-week.com
Araftofadministrationshasleftlandlordswithemptybig-box
unitsincludingsomethataredifficulttore-let.AlexLawsonfinds
outwhatcanbedonetoenticeretailersandconsumerstothem
Running
onempty
After administrations
such as Focus DIY there
are dozens of empty units

16. Warehousing
eMPTY uniTs
➤
XVI Retail Week October 2012 www.retail-week.com
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
Litecraft.co.uk 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. 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 www.retail-week.com
C
M
Y
CM
MY
CY
CMY
K

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