Supermarket expansion hits Six Year Low

Posted on 5 August, 2014 by Kirsten Kennedy

The number of applications for new supermarket space in the UK has now fallen to the lowest level seen since the start of the financial crisis, with only 15.22 million sq ft of shop space currently proposed by the grocery market.

Supermarket-expansion-hits-Six-Year-Low

According to property agent CBRE, this is the lowest amount seen since September 2008, indicating that the “space race” amongst the UK’s largest grocery retailers is well and truly over.

In part, this drop in construction activity for supermarkets is a direct result of changing consumer habits, which now place a higher emphasis upon convenience shopping.

Adapting to this trend, supermarket chains have channelled increased investment into existing stores and expanding their convenience store networks, resulting in a 30 per cent year on year drop in new space under construction.

One of the directors in CBRE’s retail business, Christopher Keen, believes a number of factors are at play in the new preference for smaller stores.

He says; “The grocers’ preference for smaller store formats is showing through now with the amount of ‘proposed’ floor space – i.e. without planning consent yet – at its lowest level since the ‘race for space’ began at the onset of the credit crisis.

“The reason for the shift to smaller stores is in part a response to changing consumer shopping patterns but also because they are lower cap ex to deliver, have less impact on trade of existing stores and are easier to secure planning permission.”

Morrisons

Yet although planning applications and construction projects have fallen sharply, British supermarkets still hold an immense amount of land. Space with planning consent, but with no work ongoing, amounted to 29.92 million sq ft at the end of March – a 14 per cent year on year hike, and more than double the amount held ten years ago.

In order to tackle claims by campaigners that supermarkets are stockpiling land which could be used to resolve the UK’s housing crisis, Tesco last month announced it will use a portion of the land it previously earmarked for supermarkets to build 4,000 new homes.




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