The UK retail sector has delivered optimistic signs of a bright future ahead as the recovery from the Covid-19 pandemic continues. Despite 2022 being defined in many ways by economic uncertainty, retail ended the year on a high note and led to forecasts of a strong 2023.
When we look ahead to retail space trends in 2023, we can see that certain types of retail locations are performing more strongly than others. For landlords and tenants looking for future-proof retail spaces, these are where you should concentrate.
Research from FY shows three main areas. The first is shopping centres which saw a NET change of 0% in the number of new stores versus those closing in 2022. In short, this means that this retail property type did not see a huge number of closures and retained its health through the most challenging economic times for many years.
Knight Frank analysis confirms the attractiveness of shopping centres, stating in their Retail Property Market Outlook 2023 report that this could be the year of low volume sales for shopping centres as people hold onto their assets thanks to their long-term value. This follows a total of more than £1.5bn invested in shopping centres over 2022.
Availability on retail units to let
At the same time, unit vacancies in shopping centres have declined by 1.2% compared to the start of the pandemic as the sector recovers and occupiers continue to choose shopping centre spaces as the ideal site for their retail and leisure businesses.
Retail parks have also retained their status as one of the most attractive retail and leisure destinations thanks to ongoing strong performance. Overall, the number of retail park let out in the UK increased by 0.4% over the course of 2022 as many businesses saw the value in the location.
Key growth areas include the drive-through food and beverages category and retail units designed for health and beauty businesses, according to the FY data. Vacancy rates overall have fallen by 2.5 since the start of the pandemic, with most of that drop occurring in 2022 as the economy recovered.
The flexibility and accessibility of retail parks continues to make them a popular site for retail and leisure businesses. This will continue to hold true, and as the pandemic recedes this could be the ideal time to consider a move to this type of retail location.
Finally, the high street has also seen something of a recovery over 2022. What has become an unappreciated section of the UK retail real estate sector enjoyed a successful end to 2022 and could have a good year ahead. A busier than usual Christmas period where spending increased by 13.7% year-on-year, with much of that happening on the high street, has combined with retailers in this area being healthier than anticipated and better prepared for future shocks.
Savills notes that of the top 30 high street occupiers by unit count in 2022, only four were considered to hold a significant level of risk, compared to nine in 2015. This suggests that the high street is inherently more resilient than it used to be.
It also bodes well as a foundation for an improved economic situation that is projected over the next 12 months. As the cost of living crisis is scheduled to ease, people will have more disposable income once more and the high street could benefit. With this in mind, businesses looking to relocate their retail or leisure business in the next 12 months could do well by looking at a high street site.
Where you choose to locate your retail or leisure business can be all important for its success. Your needs will dictate what space is best for you, but following some tough economic times it appears that several types of space in particular are enjoying success.
With more to come over 2023, this could be the ideal time to secure your next property. Click here to learn more about our available shopping centre, retail park and high street properties for rent today.