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The rise e-commerce has reduced demand for traditional retail space on high streets. Many large retailers have downsized their physical store portfolios or gone into administration, leading to increased vacancy rates.
However, this has also created opportunities for non-retail businesses like service providers, co-working spaces, and experiential concepts to move into vacant retail units. Landlords are having to be more flexible and allow temporary, ancillary or mixed uses to fill empty spaces.
The growth of online retailers seeking physical showrooms and the resale/rental market is driving demand for smaller high street units. Brands are looking for prime locations to showcase products and offer services like click-and-collect.
Sustainability and ESG considerations are becoming more important factors in the property selection process for retailers. Landlords will need to improve the environmental performance of their assets through retrofitting to meet evolving regulations and occupier demands.
There is a polarisation in investment demand towards prime, sustainable assets in major cities/towns versus struggling secondary high streets. Poorer quality retail space faces becoming unlettable unless improved to higher energy efficiency standards.
Overall, the high street retail landscape is fragmenting, with successful locations densifying with mixed-use development while others decline as retail requirements change. Proactive management and repurposing of space will be required.
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This update is for general guidance only and advice should be taken in relation to a particular set of circumstances.
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