Savills reports resilience in challenging times
Despite the well-documented challenges currently facing the retail sector, the out of town retail warehousing market is remaining resilient, according to research from international real estate advisor Savills.
The firm notes that, whilst CVAs (company voluntary arrangements) and administrations dominated the headlines last year, store openings at retail parks rose above average in 2018, totalling 868 compared with the seven year average of 819. Furthermore, despite the distress within the sector, only 3 per cent of out of town units were affected by either a CVA or administration, and of those affected only 36 per cent were earmarked for closure.
Jaime Dunster, head of retail warehouse investment at Savills, comments: “Investment into the retail warehousing sector will still largely depend on narrowing the gap between vendors and purchasers expectations. However, there are signs we will see an increasing number of opportunistic buyers this year. The occupational story in some ways defies the negative headlines, and with more investors becoming aware of this, we expect an uptick in volumes.”
With regards to the occupational market, Savills research goes on to report that the type of goods sold at retail parks – often bulky goods and DIY products – better insulates schemes against the rise of online shopping, with customers often wishing to try before they buy. In addition, the large unit size of retail warehouses, along with ample car parking, leaves retailers at these schemes better placed to service online sales, click and collect orders and returns.
Sam Arrowsmith, associate director in the Savills research team, comments: “With the wider retail market continuing to struggle amidst changing consumer behaviour, retail warehousing remains defensive, with the flexibility of space and the types of goods sold at retail parks allowing the out of town sector to hold its own against the rise of online shopping.
“Although we may see retail warehousing vacancy rates tick up slightly this year due to CVAs and administrations, when you compare it with the global financial crisis rates remain low and tenant demand, particularly from the growing discount stores, will continue to be steady.”