Research by Trevor Wood Associates identifies a further rise in the UK’s retail warehouse vacancy rates. Figures from the leading retail consultancy responsible for compiling the Definitive Guide to Retail and Leisure Parks 2019, reflect tough trading conditions for UK retailers. The vacancy rate hit 7.5% at the end of 2018, up from 6.3% in Q2 and the biggest increase recorded since the consultancy began gathering data at the end of 2001.
2018 proved a challenging year for many UK retailers as turbulent economic conditions and diminishing confidence took their toll. Tenants including Fabb Sofas, Maplin Electronics, Poundworld and Toys “R” Us went into administration or entered into a CVA. In addition, there were disposals, relocations and downsizing by the likes of Carpetright, Office Outlet and Homebase.
According to the research, these store closures helped raise the UK’s vacancy rate to 7.5% at the end of December, up 1.2% on Q2 2018. By the end of the year, the amount of available space rose by more than 5m sq ft.
Trevor Wood Associates has built up the most comprehensive retail warehousing database in the UK with detailed information for 17,000 retail warehouse units trading under construction or in the development pipeline. Its Definitive Guide to Retail and Leisure Parks provides a valuable snapshot of the state of the market.
Up until the end of 2017, UK warehouse vacancy rates had been steadily falling since hitting 10% in mid-2013. Yet the rate, which includes both free-standing units and parks, is now once again on an upward curve.
However, the current rate needs to be put into context and the figure is still significantly lower than the peak vacancy rate of 11.8% Trevor Wood Associates recorded in mid-2009.
The report also indicates that there is some cause for optimism with second-hand space helping fuel the growth of expanding retailers. During 2018, more than 2m sq ft of floorspace was taken by retail park tenants. Although this was lower than the 3m sq ft that opened in 2017, it shows there are still some good news stories within UK retail. The ten fastest growing retail park tenants have occupied a total of more than 5m of additional floorspace since 2015.
Once again, the research highlights significant differences when looking at the vacancy rate by planning consent, although the gaps continue to narrow. Much of the recent take up has been by Comparison Goods retailers predominantly interested in good quality Open A1 Non-Food consented units, together with variety retailers looking for good value bulky goods units.
Trevor Wood Associates calculates that at the end of 2018 the Open A1 vacancy rate had risen to 6.2%, compared to 4.7% in 2017. Meanwhile, Open Non-Food units rose from 4.9% to 8% and the rate for other units increased from 4.6% to 7.0% in 2018.