Retail Market Activity Spikes Amid Economic Challenges According to Green Street’s Local Data Company
New insights on the UK retail and leisure market revealed a boom in commercial real estate activity over 2023.
London, 21 March 2024 – The latest report by the Local Data Company (LDC) and Green Street, covering key developments across the entire Great Britain retail and leisure market over 2023, shows a spike in numbers of both closures and openings, representing significant churn. The overall data picture demonstrates the resilience and flexibility of GB retailers and leisure operators in the face of widespread economic difficulty, with clear opportunities emerging for businesses and landlords.
Rises in interest rates and operational costs compounded the challenges for GB retailers, leading to a year-on-year increase in closures of 14% between 2022 and 2023. However, closures were somewhat tempered by a 5% rise in openings during the same period, indicating a much more resilient and adaptable market than has been seen in previous years. Innovative changes of use and retail-to-residential conversions have become increasingly attractive, offering an economically viable option to address vacancies, align locations with current demand and revitalise town centres.
Retail parks were a particular area of strength, continuing the positive trajectory they have seen in recent years. With a net increase in units of 0.4% over 2023, they were the only location type to see a positive overall change. Demand remained high for retail park units, driving a 1.4% year-on-year decrease in vacancy rate. Further decreases are expected as retailers continue to expand their out-of-town offer, with investors in this space projected to see some rental growth.
While competition from out-of-town retail drove a 1.3% decrease in units for shopping centres, vacancy did improve by 0.5%, reflecting continued efforts to attract occupiers following the pandemic as well as convert long term vacant space into other uses. Analysis by Green Street reveals that strong, experience-led tenant mix is the key to thriving shopping centres; accordingly, for many retailers in this sector, the focus has been on creating immersive in-store experiences and prioritising highly-visible prime locations.
Barbers, nail salons and beauty salons were among the fastest-growing categories in 2023, reflecting sustained demand for personal grooming services. Convenience stores also continued to expand, with c-store formats ideally positioned to cater to cost of living-influenced shopping trends for more frequent trips and smaller basket sizes. Green Street predicts that community provision will continue to be a major theme in local retail strategy, with mixed-use development projects becoming easier to realise following changes to UK planning regulations.
Despite the economic headwinds seen over 2023, the latest data indicates a notable level of resilience across GB retail and leisure. While inflation and interest rates ease, making space for growth, uncertainty is still present in the form of anticipated economic and political change. Green Street and LDC anticipate that flexibility and careful strategy will enable agile retailers and developers to navigate any upcoming challenges and identify opportunities.
Read the full report for further details and analyses on 2023 Retail and Leisure Trends.
Methodology
The Local Data Company visits over 3,300 towns and cities (retail centres and government-defined retail core), retail parks and shopping centres across England, Scotland and Wales.
Towns are updated on a 6- to 12-month cycle depending on size and churn, with both a field survey and office research team tracking changes in the local market.
Each centre has been physically walked and each premises recorded as vacant, occupied or demolished as recorded on the day of survey. Vacant units are units that did not have a trading business at that premise on the day of survey.
‘Retail’ refers to convenience retail, comparison goods retail and service retail, while ‘leisure’ refers to leisure destinations, namely entertainment venues, restaurants, bars, pubs & clubs, coffee shops and fast food outlets.
The GB vacancy rate analyses the top 650 town centres across England, Wales and Scotland.
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About Green Street
Green Street is the preeminent provider of actionable commercial real estate research, news, data, analytics, and advisory services in the U.S. and Europe. For more than 35 years, Green Street has delivered unparalleled intelligence and trusted data on the public and private real estate markets, helping investors, banks, lenders, and other industry participants optimize investment and strategic decisions. The firm delivers exclusive market information, conclusion-driven insights, and predictive analytics through a SaaS platform. To learn more, please visit www.greenstreet.com.
About Local Data Company
The Local Data Company is the UK’s most accurate retail location insight company. We track openings and closures activity for every retail and leisure business across the country. Our data, analytics and insights power strategy and decision-making for businesses working across retail, leisure, out-of-home media, investment, property and financial services. For more information, please see www.localdatacompany.com.
Media Contact
Lucy Stainton
Commercial Director, Local Data Company
07889591487