Carpet retail

Furniture retailers deliver the goods

Consumer spend on out-of-town retail parks is forecast to rise by five per cent each year over the next five years. It is clear that bulky goods such as furniture and carpets are currently in demand by the UK consumer and we have seen a real push by these retailers to open new stores, focusing on making deals happen rather than holding out for large incentive packages. This is no doubt partly down to the vary low void rates across most of the UK and limited new development.

Wren Living, Furniture Village, Sofology and Tapi Carpets are all actively expanding, and in terms of physical space, IKEA's new 20,000 sq ft (1858 sq m) stores are trading well. Lord Kirkham, the founder of DFS, is also set to launch a new sofa business, having lined up a number of stores ranging in size from 17,000 to 30,000 sq ft (1,580-2,787 sq m).

Wilko’s excellent trading performance continues since opening its first retail park stores a couple of years ago. This has led it to be one of the most acquisitive retailers in the market. It is very much focusing its expansion on the high footfall destination parks, seeking stores of  about 10,000 sq ft (929 sq m).

The other major driver of tenant demand for retail warehousing at the moment is the value sector, where retailers are aiming to challenge the dominance of major food outlets. B&M, whose format is getting larger and larger, Home Bargains and, from the food value sector, Lidl, Aldi and The Food Warehouse are all very acquisitive. In this sector too there is a new entrant: Pepkor rolled out Pep & Co into 50 town centres last year and last week it opened its first out-of-town format store that will trade as GHM! in Hinckley and Isle of Sheppey.These stores offer broadly an equal quantum of food, homeware and fashion.

The current strength of demand from bulky goods retailers and the falling supply of space is putting upward pressure on rents and downward pressure on the incentives landlords are offering tenants across the UK. The latest data from IPD/MSCI shows that for the first time since 2007 average retail warehouse rents rose in all regions. Savills forecasts that this trend will continue with an annual rental growth of 2.5 per cent annually over the next five years.

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