The Bright Side

Written by Zach Maiden of Vickery Holman

Edited by Lesley Anderson

As a commercial property consultant based in Exeter for Vickery Holman, I have been watching the market closely through the pandemic. While the press focuses on doom and gloom, there are plenty of opportunities too. I’ve written an update on the different parts of the market for any landlords, tenants or business owners reading!

Is retail reeling?

There is no doubt that the retail market has suffered over the past 18 months but it’s not all bad news. Over the last 10 years, prime retail rents have, on average, only gone upwards and it could be argued that with the rise in online technology and e-commerce there was always going to be pressure on retail rents. 

If we look back to December 2020, rents had already been plateauing as retailers had struggled to keep up with online trade. Such decline in rents had been expertly masked by national instability with Brexit and the 2020 UK General election being blamed all the way back to the Trump administration gaining power in the US.   

Challenges for the High Street

There has been a shift from dated larger units. Those that historically formed the staple of typical town centres, anchored by larger mainstream occupiers such as Wilkos, Sainsbury’s, Topshop etc.

One solution is the resurgence of the leisure market and the widening of planning uses (to include ‘E’ use) which is definitely a welcome change that will undoubtedly bring about a better consumer experience.

If we look at Exeter, it could be argued that much of the fringe retail space is no longer needed and an allocation to say residential would provide better competition in the town.

Positives

With the above in mind, there are actually opportunities in the retail market. Coastal retail has performed very well due to the rise of ‘Staycations’ and much of our UK holiday destinations benefit from small retail units in quaint English seaside towns with good seasonal trade. In this respect, demand has continued to improve in these locations. We are seeing local traders upgrade their properties by either taking better located premises on generous incentive packages or investing in their future by buying their freeholds.

Changes are vital for the continuation of the High Street (especially with stiff competition from online e-commerce). This is clearly an opportunity for retail to reinvent itself and provide exciting consumer experiences to urban areas.

Interestingly, small retail premises which are cheaper are still popular. There has been a rise in independent leisure occupiers looking to take redundant retail premises in regional town and city centres. This ultimately provides an alternative mix and an intriguing number of uses in the local area.

Trends in the market 

The commercial property market has certainly seen a swift change in consumer trends and occupiers are required to adapt before they become obsolete themselves. The rise of e-commerce has been a factor in the high street demise but we believe savvy occupiers will utilize this to provide a mix of online and standard lock up shop sales in order to compete. 

In-town showrooms, which allow consumers to browse the physical shop and then buy online, are on the rise.

Brands such as Ikea and John Lewis have trailed small retail outlets in town centres and we believe the concept has a future in the changing retail environment. We are seeing a trend with online retailers using brick and mortar stores for Click & Collect where customers buy online and pick up from the store in their own time. We are also seeing retailers using physical stores for ‘brand awareness’ and utilizing consumer browsing trends and experiences to advertise their goods. They are confident consumers will then purchase online where a perceived discount can be had.

What’s next?

The future of the retail market remains in the balance but on a smaller scale, we believe it is a very exciting time for startups and new businesses. Currently, there are good incentives to be had on the High Street and good secondary locations and the new E Use Class (widening of many retail uses into one user class) has now set a precedent. 

The Vickery Holman team think High Streets will become shorter, as securing local authority housing quotas becomes a necessity. This will provide good competition for retailers in towns centres and close the void gap left on the High Street. Such occupiers will also be more likely to be quality independents and provide a more interesting retail offering.

Along with good quality independents, we expect the leisure scene to initially come back strong as people aim to get out and enjoy family days out again. We expect leisure occupiers to take larger premises in town centres and embed themselves into the retail scene for the long term.