17 Jul 2012
The surge in supermarket development activity shows no sign of abating - growing by more than half since the credit crunch - despite the increasing economic uncertainties, according to research from CBRE.
The rapid development of supermarket space across the country shows no sign of abating, according to property research.
Commercial property and real estate services adviser CBRE said increasing economic uncertainties are doing little to dent the supermarket 'space race', with development growing by over half since the credit crunch.
Since September 2007, the UK supermarket pipeline has grown by 57 per cent. The amount of new space in the pipeline at the end of the first half of 2012 increased to 5.34 million square foot, CBRE said.
Now, supermarkets represent 38 per cent of all shops in the development pipeline, up from 25 per cent four years ago, and 39 per cent of space under construction.
The massive uptick in supermarket expansion activity is increasingly broad, taking in both high street and out-of-town stock; new development and new store acquisition.
Grocery sales in the UK are dominated by the 'big four', Tesco, Sainsbury's, Asda and Morrisons.
Over 2007-2011, the speculative shopping centre and retail park pipeline cumulatively declined by 13.6 million sq ft; however, the total shops pipeline has still grown by over 4 million sq ft, driven by the upturn in grocery development.
Chris Keen, director at CBRE, said: "There are not many sectors of the UK property market that are growing rapidly these days, but supermarkets are a notable exception.
"The withdrawal of speculative developers following the onset of the 2007 credit crisis provided supermarkets with a rare window of opportunity to increase expansion activity levels, an opportunity, most key grocery players grasped with alacrity."
Mr Keen said the "main push" continues to be for edge and out-of-town space because of its accessibility.
"Grocers are, however, also acquiring additional high street stores, particularly in conurbations where it is more difficult to obtain planning permissions for superstore development."
The CBRE research also shows the rapid growth is affecting grocery formats in different ways, with some large-scale grocery firms reporting disappointing non-food sales growth.
However, in practice, nothing has yet filtered through to pipeline figures, CBRE said.
"With speculative development at a recessionary low, grocery development is often the only game in town and could remain so for a lengthy period," Mr Keen said.
"We do not expect the supply of new supermarkets to dry up while non-food and service operators retreat from the high street and smaller markets. The internet, home delivery, and 'click & collect' are unlikely to fill the hole and the obvious way of tapping local, everyday non-food items and services is via supermarkets. The scramble for grocery space consequently looks set to continue."Submitted by: