Bulky goods return to the out of town retail market

The demand from retailers looking for space in out of town retail and shopping parks is high, showing the market is in robust health. What is interesting is the large number of requirements from the bulky goods brands, driven by the recovery of the housing market and strong consumer confidence.

There are 20 brands currently seeking new units. Along with the established retailers such as Wickes, Dunelm and Furniture Village, there is demand from retailers that established themselves in the aftermath of the recession, notably Wren Living and Oak Furnitureland. These retailers are looking to enter new geographic markets as well as increasing their floorspace in many of their existing trading locations.

There has also been a number of new entrants to the bulky goods market including Furniture Barn, Mattressman and Tapi Carpets.

Along with the demand from other sectors of the market, we are beginning to see an environment where headline rental growth is becoming more than just an aspiration. Looking ahead, the market has a financially strong group of retailers operating in it, coupled with limited amounts of new development, so the ability for retailers to expand is going to become a challenge and we believe void rates are going to fall to new all time lows.

The strong occupational market also means out of town retail parks are continuing to deliver steady total returns for investors, with an increasing potential for high returns. Over the next 12 months we could see voids on schemes being thought of as a lucrative opportunity for strategic asset management rather than a risk.

Investment volumes reached £675 million for the first quarter of 2015, an 18 per cent increase on the £570 million transacted in the first quarter of 2014. The most active purchasers at present are the UK institutions, though there has been an increase in interest from non-domestic investors, particularly the opportunistic US funds who are targeting yields of 6-6.5 per cent.

Further information

For more details, contact Savills Retail

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