Retail parks in the UK are experiencing a resurgence, driven by factors such as affordability, accessibility, and adaptability. Since the Covid-19 pandemic, these out-of-town locations have attracted a more diverse range of occupiers beyond traditional retail brands, including discount retailers like Aldi, B&M, Iceland, and Lidl. These retailers are expanding their presence in retail parks due to the ability to "sweat the box" by adding mezzanine floors and utilizing stores as distribution hubs for smaller satellite locations.
One significant advantage of retail parks is lower operating costs. Service charges are typically around $1.50 per square foot, a stark contrast to shopping centers where they can be ten times higher. The buildings in retail parks are often newer, requiring fewer upgrades and less staffing, further contributing to cost-effectiveness. This allows retailers to allocate significant space, for instance, 1,000 square feet in a 20,000 square foot store, for services like click-and-collect without impacting the general shopping experience, a flexibility often unavailable on high streets.
Retail parks also offer enhanced customer convenience, with easy access, ample free parking, and a focus on "mission-based shopping." This leads to high conversion rates, with some reports indicating 87% for retail parks compared to 71% for general retail. Owners are investing in the customer experience, improving landscaping, security, and especially the food and beverage offerings, which now include a wider variety of national chains. Occupancy rates are high, with some operators reporting 99%, and overall vacancy rates are low, typically between 2% and 3%, making space highly competitive. This success is reflected in footfall, which rose 1.7% year-on-year at retail parks, while declining on high streets and in town centers.
