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Shop Chains Increase in 2012

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United Kingdom  London  retail space  Blockbuster  HMV  Positive Retail Performance  retail expansion activity  UK Retail Chains  High Street Property 

Shop Chains Increase in 2012

By - Thursday 17 January 2013

Retail space is still an attractive asset for those considering property investment, with figures from the CBRE showing that the total number of businesses with multiple branches in Great Britain increased in 2012. Despite continuing administrations - HMV and Blockbuster being the latest to join the list - it seems that retailers, caterers and leisure companies are looking to expand. This may come as a shock to many, with the current climate making protectionist policies and the consolidation of existing assets attractive. Nevertheless, chains grew by 0.47 per cent during 2012, with catering, leisure and retail branches enjoying 6.02 per cent, 5.17 per cent and 0.02 per cent increases respectively.

However, it may not be time to break out the champagne just yet, as overall net growth was marginal. According to the CBRE, when put into context, expansion activity is still barely 25 per cent of pre-downturn levels. Positive retail performance has been attributed to a high proportion of branches going into administration then commencing trading under new management or a new brand name. Nevertheless, retail and catering markets remained buoyant.

Across the board, speculative development activity is near its record low, while expansion opportunities are few and far between. Prime stock is highly competitive and is now very limited. The market is also suffering from a lack of larger units, with grocers, pound shops and "other large store players" going after the same spaces. Nonetheless, this is good news for landlords in possession of large, prime space, helping to drive up rents.

At the other end of the spectrum, the story is somewhat different. According to the CBRE, the market is "awash with obsolete small-scale, secondary high street space that multiples can no longer trade form". In their Chain Expansion Quarterly Market View, they explained: "Grocers are currently the only ones in a position to build their way out of the space logjam problem. With little appetite for poor quality secondary space and little new primary space coming on stream, chain retail expansion activity will inevitably remain subdued."

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