Savills report reveals retail landlords are looking into redevelopment
Research from international real estate advisor Savills has revealed that up to three quarters of landlords are undertaking or considering redevelopment of retail assets, but that 90 percent will first look to reposition their schemes with a revitalised retail and leisure offer before considering alternative uses.
In a survey of over 30 companies, which collectively control over 1,000 schemes, data from Savills in its new Re:Imagining Retail report, released today, shows that 18 per cent of landlords have already completed a repurposing project with a further 75 per cent considering undertaking such a project in the foreseeable future. The research comes as landlords are increasingly considering the opportunities to reposition or repurpose their retail assets as the industry faces a series of well-documented challenges.
Savills’ data shows that the first priority for retail landlords is to look at enhancing and repositioning the retail and leisure offer to create a modernised, differentiated and exciting tenant and use mix. In many schemes this actually results in an increase in retail floorspace. However, if that option has been exhausted, or if the amount of retail space needs to be reduced, residential is the second most likely option (85 per cent) closely followed by health and community (80 per cent). Last mile logistics are being considered as an alternative use by 30 per cent of landlords, predominantly by owners of retail parks and shopping centres, to tie into the growth in ecommerce and Click & Collect.
Savills research goes on to show that there is a difference in what landlords believe is needed in terms of repurposing and what is most likely to happen in the short term. According to those surveyed, repositioning is most urgently required in shopping centres but is most likely, in the immediate future, to take place within department stores. This is in line with the changes being seen within the department store sector. Conversely, retail parks are not generally considered to urgently need repurposing and yet are anticipated to see a considerable amount of development. High streets, however, are perceived to require a significant reduction in retail space but expectations are that this is much less likely to happen due to fragmented ownership and lack of funding options.
Mark Garmon-Jones, head of shopping centre, retail investment and repurposing at Savills, commented: “Structural changes within the retail industry means it’s time for landlords to futureproof their schemes against uncertainty, so it’s positive to see so many of Savills clients that we are working with are already undertaking or considering a redevelopment of their scheme. Repurposing doesn’t have to solely be about reducing the retail footprint, instead it is about the re-creation of schemes to provide a modern and revitalised offering that will stand the test of time.”
Tom Whittington, retail and leisure research director, added: “There has been a lot of talk of late about there being too much retail space in the UK, but opportunities are certainly still there if the right tenant mix, with innovative and differentiated retail occupiers, is considered. The best examples of repurposing are often those that bring in a suite of alternative uses, which complement one another, and of this retail can still continue to play a huge role.”