Bulky Goods Market driving Retail Warehouse Demand

Posted on 8 June, 2015 by Cliff Goodwin

According to research by the international real estate advisor, Savills, there has been a clear increase in demand from bulky goods retailers — with 20 brands currently seeking new units.

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The service provider’s latest UK retail warehouse bulletin reports that along with established retailers such as Wickes, Dunelm and Furniture Village, there is now increasing demand for space from retailers that established themselves in the aftermath of the recession, notably Wren Living and Oak Furnitureland.

As well as several new entrants to the bulky goods market — including Furniture Barn, Mattressman and Tapi Carpets — scores of long-standing retailers are expanding into new areas of the UK. And with an upturn in trade many are finding their existing units too small and are actively seeking additional floorspace.

“Overall the out of town occupational market is in robust health with requirements across the full range of unit sizes,” explains Dominic Rodbourne, head of out of town retail at Savills. “The increase in demand from the bulky goods retailers has been driven by the recovery in the number of transactions in the housing market and strong consumer confidence.

“Added to this is a demand from other sectors of the market, which means we are beginning to see an environment where headline rental growth is becoming more than just an aspiration.”

Rodbourne adds: “Looking ahead as the market has a financially strong group of retailers operating in it, coupled with limited amounts of new development, 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 Savills’ bulletin reports that the retail warehouse investment market has continued to remain strong, with £675m being invested in the first three months of 2015, a rise of 18 per cent on the £570m for the same quarter last year.

The firm claims that the most active participants in the retail warehouse sector are the UK institutions, although there has been a marked increase in interest from non-domestic investors, notably asset hungry North America funds.

Jaime Dunster is head of retail warehouse investment at Savills. “The strong occupational market means retail warehouses are continuing to deliver steady total returns, with an increasing potential for high returns going forward.

“Over the next 12 months,” he stresses, “we could see investors begin to see voids on schemes as a lucrative opportunity for strategic asset management rather than a risk.”




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