Featured Sector: Retail

We have already seen the beginnings of an upturn in retail development since the second quarter of 2013. However as overall activity recovers, the underlying picture is of an increasingly polarised retail market. With a continued oversupply of shops in many high streets, prime shopping centres and larger town centres will be the focus of high profile, high value developments.

Growth in project starts during 2013 was driven by shopping centre developments. Growth in retail rents has so far been subdued, reflecting the tough market conditions retailers continue to face. However improving economic conditions have increased expectations of occupier demand, and investor demand for shopping centre space has strengthened. Prime yields fell in the final quarter of 2013 according to Knight Frank. Good secondary shopping centre yields fell over the same period, reflecting increased risk appetite from investors.

A key example of the reviving interest in shopping centre developments is Westfield’s £260m Broadway shopping centre in Bradford. The scheme was put on hold in 2008 following the start of the recession; however construction since restarted in January 2014 and more than half the centre has already been pre-let. There are also a number of large scale retail developments in the early stages of the planning process, including Westfield’s proposed White City expansion.