Retail Parks and the “People Still Shop in Shops” Shocker…!
On a bright, crisp and cold spring morning in March I was delighted to bear witness to that heartening and serene sight. The faltering, blinking emergence into the world of a fresh retail park scheme. The car park chaos, the meandering swarms of curious consumers and the reassuring thrum of contactless technology ushering pounds and pence onto balance sheets of happy retailers.
On this occasion the happy retailers were Home Bargains and Aldi on the Manse development of the former Rolls Royce plant in East Kilbride (a scheme in which Burness Paull had significant involvement in delivering). For a property lawyer focusing on the retail sector it was reassuring real world evidence that people still shop in actual bricks and mortar stores!
The media are drowning out such simple truths by amplifying the din caused by the clack and clatter of descending shop shutters. Store closures are happening, but that is not the only story in retail.
If we seek a positive narrative for retail going forward then retail parks may be the place to start.
If 2016 was a year for counting up the lost celebrity names (Prince, David Bowie et al) then 2018 was the year for lost retail names. It seemed that no big name was immune from speculation over CVAs and administrations. In the context of retail parks Maplan and Toys ‘R’ Us were the biggest losses (they had so much floor space). Yet the decline hit retail parks less harshly than the high street or shopping centres. Recently-published statistics from the various industry commentators show a shallower drop for retail park rents with good growth expected over the next five years. Even the anecdotal evidence on vacancy rates seems over-cooked. Vacancies have risen at lower rates than feared and are far below peak vacancy rates seen in 2009. While town centres lick their wounds over the departures of M&S and Debenhams, the diversity of retail park occupiers and, perhaps most importantly, their lack of vulnerability to online shopping trends makes for a bright and sustainable future.
Occupiers such as B&M, Wilko and The Range, commonly found on retail parks, have strong appeal and rank amongst the top 10 visited retailers.
The relative resilience and continuing popularity of retail parks is certainly borne out by our experience. Having acted for a wide selection of landlords, developers, investors and tenants across a variety of retail parks in recent years we have seen trends identified by commentators emerge first hand: retail parks that can attract a strong and complementary line-up of occupiers who have relevance for the surrounding community can expect to succeed.
We have completed deals involving all of the active occupiers from Lidl and Aldi to Home Bargains, B&M and Pets at Home. Away from the retail tragedies unfolding elsewhere there is an active demand for the right retail park space from the brands that reflect shopping habits in 2019.
A great illustration comes from Aviemore Retail Park. Burness Paull worked with London & Scottish Developments from initial acquisition, development and letting, to the eventual sale of the park to an investment fund (Threadneedle, one of the country’s largest retail park investment managers).
Anyone who is familiar with Aviemore will know that it is one of those rare places which has a year-round holiday season. Tourists flood to the town in summer and in winter – generating a flourishing tourism economy but also putting a huge pressure on the services, shops and infrastructure serving the local area.
This meant the 6 acre development site off Grampian Road in the centre of the town – formerly destined to become a Tesco superstore - was perfect for development.
On acquisition of the site, London and Scottish Developments quickly put forward proposals for a mixed use retail development, which would complement the town’s existing offering to both tourists and locals. The now-completed £10 million plus scheme has attracted household name retailers Aldi, Home Bargains and Costa and also includes a Tiso Aviemore Outdoor Experience store – with bespoke design for the local area - and Speyside Distillery’s “The Snug”.
By bringing discount retail to the heart of the Highlands together with an intelligent mix of tourism, leisure and outdoor recreation, the development appeals precisely to its audience. In addition, the construction phase saw 40 local jobs being created and, now open for trading, the development has provided 100 permanent long-term posts (addressing some of those very real concerns around national retail employment).
We are also currently working alongside London and Scottish Development on vibrant and successful retail parks in Cumbernauld (M & S, Food Warehouse, Pets at Home etc), Paisley (The Range, Lidl), Cowdenbeath (B & M).
So despite the downbeat headlines the fact is that with the right ingredients there is still a strong case for retail investment in the right kind of stock.
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