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Discount retailers change the landscape of out-of-town retail: new study

A new report has revealed that expansion by discount retailers is bringing significant changes to the out-of-town retail landscape.

GENERAL MERCHANDISE

Discount retailers change the landscape of out-of-town retail: new study

A new report has revealed that expansion by discount retailers is bringing significant changes to the out-of-town retail landscape.

Findings from Knight Frank’s recent out-of-town retail and leisure research report show that the fall in headline rents in recent years has been mainly driven by discount retailers.

Knight Frank said that the average rent for The Range, across a sample of 54 stores, was £10.55 per sq ft, while B&M paid £11.71 per sq ft across a 91-store sample. The property consultancy added that these figures were much lower than for the more established operators which expanded before the recession. 

The findings reveal that the investment market saw approximately £444 million worth of out-of-town deals in the second quarter, with a 146% increase in volume on Q1 and a 25% increase in the number of deals. Knight Frank found that investor sentiment towards the out-of-town market was positive, although there was still a significant yield differential between prime and secondary assets which is expected to continue.

The study also shows  a significant increase in the number of casual dining outlets on retail parks in the last 12 months. Knight Frank found that at least four times more A3 units opened on retail parks compared with fast food outlets during the past year. The average rent across 206 restaurants was £24.36 per sq ft, with an average size of 3,450 sq ft.

Andrew McGregor, head of out of town retail and leisure, Knight Frank, commented: “Investors’ sentiment for out-of-town retail parks, substantially let to discount operators, is patchy at best. However, Knight Frank’s analysis would suggest that many of these operators are significant covenants in their own right, and whilst they are driving aggressive tenant packages, they are extremely successful retailers which generate high levels of customer footfall.“

“Coupled with this, many landlords are now considering A3, food and beverage offers, on their out-of-town retail parks, which is further enhancing footfall and dwell time for shoppers seeking sustenance. A prime example of this is the recent addition of Frankie & Benny’s and Harvester at Birmingham Fort.”

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